TPO rules in favour of Transact following pension transfer complaint

The Pensions Ombudsman has ruled in favour of Transact following a complaint that the provider should not have transferred the complainant's pension to the Bobins Pension Scheme.

The complainant, Mr D, originally transferred out of the Local Government Pension Scheme (LGPS) to Transact in May 2007, after being advised by Fallon Financial Services Ltd (Fallon Financial). The value of that sum was £231,907, of which Mr D took £57,979, with the remaining funds invested in the Castleton Growth Fund. Mr D withdrew a further £10,093 in August 2007, and in December 2007, Fallon Financial wrote to Transact to request the relevant forms required to enable Mr D to transfer his fund into another scheme.

In December 2007, Fallon Financial requested that Mr D’s investment in the Castleton Growth Fund be sold and the funds held in cash. In January 2008, Transact received a transfer request from Tudor Capital Management Ltd (Tudor Capital) to transfer Mr D’s fund to the Bobins Pension Scheme, of which it was the administrator.

Amongst other documents included with the transfer request was a ‘Transferring Scheme Declaration’ form signed by Tudor Capital, but which TPO said appears ought to have been signed by Transact, as the transferring scheme. In January 2008, £138,698 was transferred to Bobins Pension Scheme. However, over the course of 2010 and 2011, The Pensions Regulator (TPR) issued a series of Determinations prohibiting Tudor Capital Management Ltd from acting as trustee in relation to several small occupational pension schemes. It is unclear whether the Bobins Pension Scheme was one of those schemes.

In February 2015, Mr D’s financial adviser wrote to Transact and requested information on the plan, in which Transact confirmed it had been transferred to Tudor Capital in 2008. In April 2017, Mr D raised a complaint against Transact on the basis that it should not have transferred his pension. Since the transfer Mr D had lost track of his pension and it appears that his pension has been misappropriated, TPO said.

“As a result he approached the Financial Services Compensation Scheme (FSCS) to claim compensation for losses arising from the advice he had received from the now dissolved Fallon Financial. During its investigation FSCS established the loss, had Mr D remained in the Local Government Pension Scheme, as £318,471.07. It paid Mr D the maximum compensation available for claims against financial advisers, £50,000. In pursuing the complaint against Transact, Mr D attributed the residual loss to its decision to make the transfer to the Bobins Pension Scheme,” TPO said.

The claimant, Mr D, argued that Transact failed to act diligently, or in his best interests because the form was completed by Tudor Capital, when it should have been completed by Transact. However, TPO ruled that the form was a Tudor Capital form, and was Tudor Capital’s mistake. “It is often the case that a transferring scheme, Transact in this case, will only seek to rely on their own forms being completed correctly, and in this case they had been,” TPO explained.

Arter also highlighted that if Transact had challenged the issue with the form, on balance of probabilities, a new form would have been arranged to be submitted but it would not have changed the underlying advice to transfer. He also said that it is not appropriate for TPO to apply knowledge of the risk factors associated with pension liberation that we are aware of today, to a situation that occurred in 2008.

“In respect of the transfer, I can see no fault on Transact’s part. Whilst I have the utmost sympathy for the situation he finds himself in, in the absence of any error on Transact’s part, I cannot attribute any losses suffered by Mr D to its actions,” Arter said.

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