Out-Law News | 17 Sep 2018 | 2:57 pm | 2 min. read
The ombudsman said the move would enhance transparency, create consistency and manage expectations for all parties to a complaint in situations where an individual had been inconvenienced or spent time and effort pursuing a complaint in a case of maladministration.
The awards are also designed to compensate complainants for any distress suffered which was caused directly by the maladministration.
Awards for non-financial injustice, as set out in a new factsheet (5 page / 349KB PDF) will now usually fall into one of the following five categories of awards: nominal, significant, serious, severe and exceptional. Nominal injustice will not lead to a financial award.
Those found to have suffered a significant case of injustice will be awarded £500, serious cases will attract an award of £1,000, and severe cases £2,000. The level for significant cases is unchanged from previous policy, but the upper limit for severe awards has been raised to better distinguish between serious and severe cases.
Exceptional cases of non-financial injustice can attract awards of over £2,000. Several recent cases have seen awards of more than £2,000.
The move was welcomed by pensions expert Charlotte Scholes of Pinsent Masons, the law firm behind Out-Law.com.
“It brings greater transparency for all parties - trustees and would be complainants alike - as to the likely treatment of complaints and the making of awards where non-financial injustice is alleged,” Scholes said.
“It’s a reminder to trustees that internal dispute resolution procedures (IDRPs) are more than a box-ticking exercise. The timely and proper treatment of complaints under the IDRP process, and even before the IDRP stage, is important and will be scrutinised by the Pensions Ombudsman when considering what level of award to make. Incompetent treatment of the IDRP process will be treated as an aggravating factor and may result in a higher award. It may push a severe case into the exceptional band,” Scholes said.
“Where maladministration has taken place, it gives the relevant parties a steer as to the level at which complaints may be settled. It’s a reminder that each case will always be considered on its own facts, as should be the case, though the standards which will be applied when judging the level of award will be objective,” Scholes said.
The ombudsman said it would consider factors such as how well the respondent handled a complaint, whether maladministration took place on one or over several occasions, and the level of distress or inconvenience caused.
Awards will not normally be made if a sufficient offer of redress has been made before or during an investigation. The awards for non-financial injustice are designed as an acknowledgement to the applicant that they have suffered inconvenience or distress, rather than as a punishment to the respondent.
Awards are unlikely to be made if they were to come out of limited scheme resources, or in situations where the scheme is underfunded, in wind-up or in the process of being transferred to the Pension Protection Fund.
Non-financial injustice awards were last increased in 2015.
The Pensions Ombudsman is responsible for investigating complaints against pension providers. Under the 1993 Pensions Act, the ombudsman is able to “direct any person responsible for the management of the scheme to which the complaint or reference relates to take, or refrain from taking, such steps as he may specify” when making a determination. The idea is not to penalise the scheme, but rather to remedy genuine injustice.
Earlier this year the ombudsman announced it was planning an overhaul of the way it handles pensions disputes, in the wake of the merger of the dispute resolution functions of the Pensions Advisory Service with those of the Pensions Ombudsman.