Pensions Ombudsman review recommends closer links with FOS

Out-Law News | 27 Aug 2019 | 4:18 pm | 2 min. read

Closer collaboration between The Pensions Ombudsman (TPO) and Financial Ombudsman Service (FOS) is needed to reduce the potential for customer confusion and improve efficiency, according to a government-commissioned review.

TPO is "well-respected and effective" according to the review, which formed part of the government's programme of regular 'tailored reviews' into the continuing need for and efficiency of public bodies. The review did, however, make a number of recommendations for improvements, noting the pace of change in the UK pensions market as well as the recent expansion of TPO's remit to incorporate the dispute resolution function previously held by the Pensions Advisory Service (TPAS).

The reviewers heard a "clear case for addressing" the overlap in jurisdiction between TPO and FOS. The two services may "reasonably reach different conclusions on the same case" as they resolve complaints according to different rules, putting less savvy consumers at a potential disadvantage, according to the report. In addition, awards made by the FOS are subject to a cap of £350,000, while no such cap applies to awards made by the TPO.

Goldstone Hayley

Hayley Goldstone

Partner

Although a memorandum of understanding exists between FOS and TPO, we agree with the review's conclusions that more needs to be done to avoid misdirection of customers and ensure all cases are dealt with appropriately.

The report recommends that the TPO and FOS build on the existing memorandum of understanding between them to develop more collaborative processes, ensure clarity on to which service consumers are directed and put named contacts in place to discuss specific cases which may need to be transferred. It is also recommending both services collect better data on transferred cases and areas of overlap, to help the government establish whether further intervention is needed in future.

"The review points out that TPO and FOS could reach different conclusions on the same facts," said pensions expert Hayley Goldstone of Pinsent Masons, the law firm behind Out-Law. "It correctly states that 'a knowledgeable customer, who was able to find out what organisation would be more likely to determine in their favour - or give a larger award - is at an advantage over less savvy customers' and 'well-resourced pension schemes are also able to use the overlapping remits to their advantage, signposting customers to the organisation they think more likely to rule in their favour'."

"We agree that this could lead to unfairness and injustice. Although a memorandum of understanding exists between FOS and TPO, we agree with the review's conclusions that more needs to be done to avoid misdirection of customers and ensure all cases are dealt with appropriately," she said.

The review made some recommendations aimed at improving TPO governance, including recruiting non-executive directors and a chief operating officer as a first step to implementing a full board structure. However, these recommendations "are unlikely to have immediate direct impact on complainants and those responding to a complaint", Goldstone said.

Other recommendations include refreshing key performance indicators to reflect TPO's expanded remit; better external clarification of the appropriateness and independence of early resolution; seeking and publishing more regular customer feedback; and fully refreshing the TPO website to an agreed timetable.

"The review reports that some in the pensions industry have suggested the trialling of better communication tools, including web chat, to prevent customers contacting TPO with unsuitable cases," said Goldstone. "This may be somewhat overly ambitious at this time, but any additional resources that ensure that complainants understand how TPO can help them, and what TPO can't do, would save a lot of time for all concerned."