POS rules in favour of Royal London over misinformation case; deems comms ‘unclear’

Written by Natalie Tuck
08/01/17

The Pensions Ombudsman Service has ruled in favour of Royal London on a case where the applicant claimed the firm provided misinformation relating to his s226 policy.

Despite this, Royal London has faced criticism from POS for its “unclear” communications. However, it was noted in the case that the company recognised it could have been clear in some of its communications and offered £150 compensation, but this was declined by the applicant.

The applicant, Mr S, had complained that Royal London incorrectly interpreted the terms of his s226 policy in respect of the benefit payable to him. Mr S believed that his policy clearly states that, from age 60, it would pay an annuity per year of £2,127, “exclusive of profits”.

POS said he takes this wording to mean that profits would be added to, and therefore increase, the basic annuity. Therefore, he disagrees with Royal London’s interpretation that the policy provides him with a fund which can be used to purchase a pension either through Royal London or on the open market and the basic annuity is a promise that he will not receive less than the £2,127 per year guaranteed under the policy.

Mr S has also complained that information supplied to him has not been clear and Royal London has failed to properly explain the rationale for how it proposes to pay his benefits. He needs to make decisions about his retirement; he has no regular income and is still paying pension contributions to the policy.

However, the Deputy Pensions Ombudsman Karen Johnston ruled that the complaint should not be upheld because Royal London has correctly interpreted the terms of the policy, and, although the information provided to Mr S was deemed “deficient” by POS, this is not the reason why he has been unable to access his retirement benefits.

“I find that Royal London could have supplied him with better explanations, sooner. But I do not find it was responsible for Mr S not being able to access his retirement benefits. Royal London was correct in its interpretation of the policy and presented the correct options to Mr S,” Johnston said.

“It also told him that he could take his benefits and top up later if necessary, but he chose not to take them. Therefore I do not consider he can demonstrate that he has been kept out of his money in the manner which he asserts. In the circumstances I do not find maladministration which has caused Mr S has any significant injustice. I consider the offer made by Royal London to be adequate and do not uphold the complaint.”

POS noted that if Mr S considers that he was given misleading information about the policy at the point of sale, then that falls under the Financial Ombudsman Service, and therefore has not been considered as part of his complaint to POS.

Related Articles

Cautious optimism in a challenging world
Matthew J. Bullock, Investment Director, Global Multi-Asset Strategies, Wellington Management, meets Francesca Fabrizi to discuss how multi-asset strategies can help investors
Latest News Headlines
Adam Cadle provides a summary of the big pensions stories to have hit the headlines this week
Most read stories...
World Markets (15 minute+ time delay)