TPO upholds Prudential misinformation error complaint

The Pensions Ombudsman has upheld a complaint against Prudential with regards to the company not providing information to a member of a pension scheme it administered.

As a result, Prudential has been ordered to pay £1,000 to the member, known as Mr K, in relation to the Scottish Amicable OmniPension Plan (plan). He complained that Prudential is at fault as it had not kept him informed of the value of benefits in his plan.

He had been a member of the plan until 12 March 1990, but Prudential has said it received no formal instruction from Mr K’s employer to remove him from the plan. It said that under the terms of the plan, an annual flat rate charge was applicable.

On 31 January 2006, Mr K called Prudential, and its records show that Mr K told Prudential he was considering a transfer to another scheme so requested a transfer value. Prudential’s notes show that the call handler requested transfer discharge paperwork be sent to him. The illustration, dated 1 February 2006, quoted a surrender value of £480. The illustration also stated that Mr K had withdrawn from the Plan on 12 March 1990. However, the illustration did not contain information about applicable charges.

Six years later, on 21 June 2012, Mr K called Prudential but was told that he had no authority to speak to Prudential about his benefits. He also stated that he contacted Prudential in 1995, 2000, 2001 but Prudential has no records of this.

In May 2018, Mr K raised a formal complaint upon learning that his surrender value had reduced to £46. Prudential responded to say that, as it received no instruction that Mr K had left the plan, it continued to send annual statements directly to the trustees of the plan and that this was also the reason it would not speak to him directly in 2012.

The initial adjudicator put on the case concluded that Prudential had made administrative errors that caused Mr K serious distress and inconvenience. In particular, the adjudicator noted that he spoke directly with Prudential in 2006 about his benefits, and the illustration sent to him contained the leaving date of 12 March 1990, so Prudential ought to have known that Mr K left the plan.

In spite of this and Mr K’s request to receive his plan information directly, Prudential continued to send information to the trustees. The adjudicator ruled that this action has deprived Mr K of the opportunity to mitigate his losses. Prudential compounded this issue when, in 2012, it refused to speak directly to Mr K, incorrectly claiming it had no authority to do so.

As Prudential did not accept the adjudicator’s decision it was passed to the Pensions Ombudsman, Anthony Arter, to consider; he sided with the adjudicator. In additional comments supplied by Prudential, it stated that Mr K did not transfer in 2006 when he first made enquiries, which is likely because the transfer value was too low for a receiving scheme to accept. Furthermore, Prudential does not think Mr K could have done anything to mitigate his losses until 2017, when he turned 55. However, it accepted that it ought to have known Mr K left the plan.

In his response, Arter stated: “Given Prudential knew that Mr K had left the plan in 1990, it ought to have issued statements directly to him from this time. Its omission to do so amounts to an administrative error. To deny Mr K information to which he was entitled, has denied him the opportunity to monitor the value of his pension benefits. Prudential provided correct information to Mr K for the first time in 2006, some 16 years after he left the plan.

“Prudential’s claim that Mr K could not have transferred to another scheme in 2006 due to the low transfer value is unsubstantiated by evidence. When Mr K called in 2012, Prudential incorrectly told him it was not authorised to speak to him about his benefits, which is a further administrative error and compounded the issue of Mr K not being sent information about these benefits from 1990.

“Prudential’s administrative errors have spanned a significant period of time and have caused missed opportunities for Mr K to mitigate his losses. I find that Prudential has caused Mr K serious distress and inconvenience through its errors. Therefore, I uphold Mr K’s complaint. Within 21 days of the date of this Determination, Prudential shall pay £1,000 to Mr K in respect of the serious distress and inconvenience he has suffered.”

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