Pensions Ombudsman's decision potentially a 'pyrrhic victory' for saver who transferred £100,000 into suspect scheme

The ombudsman said that although transfer requests made by Mark Crossland to Omni, trustee of the Henley Retirement Benefit (Henley) Scheme, were not in the proper form, the saver would have acquired a statutory transfer right had he later submitted a full transfer request. It was only due to "maladministration" on the part of the trustees, who did not respond to Crossland's letters, that this did not occur, he said.

Crossland should "take advice of a person authorised by the Financial Conduct Authority" (FCA) before submitting his next transfer request, according to the ombudsman; who said that he "strongly recommended" that Crossland's next transfer application "should be to a pension arrangement of which the provider is regulated by the [FCA] or to one that is directly related to active employment".

"Doing otherwise will leave him vulnerable to a repeat of the experience he has already suffered," the ombudsman said.

"Within 14 days of Mr Crossland requesting a transfer value to a named scheme that meets the prescribed requirements under legislation and is prepared to accept it, Omni are to pay the transfer value to that arrangement," he said.

Pension disputes expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said that the decision was "not altogether surprising". However, it was "unclear how useful" it would ultimately prove to Crossland given doubts expressed by the ombudsman as to whether his money was still in the scheme, he said.

"If Mr Crossland requests a transfer to a scheme meeting the prescribed requirements as referred to by the Pensions Ombudsman, the critical question will be whether the Henley Scheme actually has the funds available to effect the transfer – the ombudsman plainly expresses reservations about this in much the same way as he did in a separate recent decision concerning the Capita Oak scheme," he said. "If not, this could prove to be something of a pyrrhic victory for Mr Crossland."

"Interestingly, it appears that Mr Crossland's transfers into the Henley Scheme were made literally just days before the Pensions Regulator kicked off its February 2013 'scorpion' campaign, which has been citied by the ombudsman in other recent decisions as the 'point of change in what might be regarded as good industry practice'. The ombudsman has not, however, been asked to consider the transfers into the Henley Scheme on this occasion, and he has been careful not to do so," he said.

"Once more, decisions like these highlight the invidious position that individuals who transferred into suspected pension liberation schemes at least prior to February 2013 are likely to find themselves in. It remains to be seen, however, what approach might be taken by the ombudsman regarding complaints made by members in relation to transfers into liberation schemes post-dating commencement of the scorpion campaign," he said.

According to the facts set out in the ombudsman's determination, Crossland transferred pension savings worth a combined £100,708 into the Henley Scheme from Scottish Widows and Wesleyan Assurance in February 2013. The following year, he made two attempts to transfer his funds out of the scheme after saying that he was unable to obtain any information about his pension for over 12 months. The scheme and its trustees did not respond to the requests.

In his determination, the ombudsman noted that the Henley Scheme had "recently been the subject of media coverage" and was "of a type that is designed to avoid regulatory obligations that would otherwise limit scope for abuse and/or bad advice". Although the determination was not concerned with the legitimacy of the scheme, the ombudsman noted that Crossland had apparently been motivated by "high investment returns" and that there was "little doubt that it was against his best interests" to transfer his savings away from "two reputable established schemes".

In correspondence with the ombudsman, Omni said that its administration of the scheme had been "affected by a number of administration problems and disruptions over the last 12 months". It claimed that the scheme assets had been invested in commercial property, which now had to be sold to enable it to honour a number of transfer requests. However, this sale was not "imminent", it said.