Out-Law News 2 min. read

Pensions Ombudsman will consider actively defending 'public interest' appeals


The Pensions Ombudsman's recent commitment to defending appeals against his determinations where he believes this to be in the public interest is an "interesting change of approach", particularly in the context of pension scams, an expert has said.

Speaking at an industry conference this week, Anthony Arter said that there was a "balance to be struck" between giving savers complete freedom to use their pensions as they wish and protecting them against the growing risk of pension scams. Until now, the ombudsman has generally not participated in appeals, which prevented Arter from defending a high-profile case involving suspected pension liberation at the end of last year.

Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said that the comments made "particular sense when dealing with determinations on pension scams", which was the context in which Arter appeared to have raised the issue.

"The determinations in this area have been followed closely by the industry when deciding whether or not to allow transfers where there are suspicions of pension liberation or pension scams, so there is certainly the wider importance with those that the ombudsman has referred to," he said.

"Moreover, the reasoning has largely come about from the ombudsman's own independent interpretation of the law, starting with Arter's predecessor Tony King with determinations in early 2015. That reasoning had not actually been put forward by any of the parties in dispute in any of the earlier determinations. Indeed, many providers and trustees are simply looking for guidance with tricky transfer requests and want to follow a correct interpretation of the law," he said.

In his speech to the conference, which was covered by Professional Pensions, Arter described Donna Marie Hughes' successful appeal against provider Royal London's refusal to transfer her pension into a small self-administered scheme (SSAS) as "an example of where I decided to interpret laws which do not fully reflect the current pensions environment, and to make a determination involving many competing interests".

"I was not represented in the Hughes case because, until now, we followed a policy of not participating in appeals unless our powers are brought into question," said Arter, who became the first former pensions lawyer to be appointed Pensions Ombudsman when he took over the role last year. "In future, if I believe the case is of wider importance, I will consider the merits of instructing counsel."

"I believe there is a balance to be struck. The public have to be allowed the freedom to use their pensions as they wish. At the same time, they need to be protected against those that are using pension arrangements as a means to access individuals' savings to use for their own purposes," he said.

Last year, the ombudsman held that Royal London had been entitled to deny Hughes' proposed transfer to a SSAS which was set up as an occupational pension scheme, on the grounds that Hughes was not an 'earner' under the rules of the receiving scheme. Giving judgment in January, the High Court ruled that Arter had not been entitled to do so.

"The ombudsman did not participate in the Hughes v Royal London appeal but, in the event of any further appeals arising out of pension scams, it would be unsurprising if he took a more active role in defending the reasoning he adopts in his determinations," said pensions expert Ben Fairhead, who was part of a team that provided legal advice to Royal London during the Hughes case.

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