Ombudsman: carrying out pension scheme transfer in one month would have been 'reasonable'

Anthony Arter, the Pensions Ombudsman, upheld a complaint brought by scheme member Philippe Pollett against Optimum Capital Ltd (OCL). OCL must now compensate Pollett for any loss caused by its delay, and pay him £500 for "distress and inconvenience caused".

"OCL … [should] have made the transfer in reasonable time after [receiving provider] Legal and General returned the completed discharge form," Arter said in his determination.

"Legal and General sent the completed discharge form to OCL on 9 July 2013. My view is that one month from that date would have been reasonable time to disinvest Mr Pollett's holdings with HBOS and BIL (on or about 23 July 2013) and then make the payment to Legal and General (on or about 1 August 2013)," he said.

Arter also ruled that it was unreasonable of an OCL director to demand that Pollett sign a disclaimer to the effect that he would take no legal action against the scheme if it carried out his transfer request before concluding legal action against its previous scheme administrator. OCL "was entitled to use its standard disclaimer", but had no right to "attempt to 'settle' any potential possible claims against them in respect of anything that they may have done in return for doing something they have no legal right to refuse", he said.

The 1993 Pension Schemes Act gives pension scheme members the right to transfer their savings from one pension scheme to another. It requires the original pension provider to make any transfer within six months of the request being made, once it has "made enquiries of the proposed receiving scheme to satisfy itself that [it] qualifies as a registered pension scheme".

The originating scheme in this case was provided by OCL, which was also the principal employer and a scheme trustee. Administrative and trustee services were outsourced to a third party, Tudor Capital Management, which provided similar services to a number of occupational pension schemes.

In April 2010, the Pensions Regulator suspended Tudor from acting as trustees following the institution of criminal proceedings by HM Revenue and Customs (HMRC). Two Tudor directors were subsequently found guilty of pension tax fraud. Over the next few years, OCL rotated between a number of different scheme administrators, trustees and legal advisers. According to the ruling, it was not always clear which company held which role. However, at all times OCL was also a scheme trustee.

The ombudsman said that it was "inadequate" for OCL to rely on its legal problems with Tudor as a reason for the delay because, as a trustee itself, it had a "joint duty to comply". OCL was therefore required to "process the transfer itself or appoint another administrator and make sure the transfer is completed".

"In any event, [the scheme rules say] the transfer must be made by a direct payment between 'the trustees/scheme administrator', it does not say the power is only vested in the administrator," the ombudsman said.

"Tudor [appears] to have been removed as a Trustee and Scheme Administrator prior to Mr Pollett's transfer request. Consequently, this should not have held up the transfer payment," he said.

The ombudsman did, however, reject a request by Pollett for OCL to compensate him for the fixed fee he paid to an independent financial adviser during the transfer process. Pollett "could equally have referred the matter to the Pensions Advisory Service for no charge", Arter said.