New Pension Ombudsman Verdict Could Offer Hope To Pension Scam Victims

The Pension Ombudsman has recently made a surprising and potentially hugely significant judgement relating to pension transfers. The Customer in this case was a member of the Northumbria Police pension scheme, who transfer his Police pension to another provider, London Quantum, which later transpired to be a scam.

The Ombudsman held that the Police had failed in their duty to the Customer. A trustees of his pension scheme, they owed a duty to the customer to ensure his money was being transferred to a safe, secure fund. By not undertaking the required checks, and not informing the claimant of the potential risks of transferring his pension, they have failed in their duty owed to him, and are therefore liable for the loss suffered. The Police were required to reinstate the customer back into their original scheme, and pay compensation for the distress caused.

The Ombudsman took the position that the Police didn’t send the required working leaflets to the Customer about potential scams, and did not investigate the scheme being transferred to at all. The Police Authority should have directly engaged with the customer and by not doing so, they feel below the level of skill expected of them.

This is a potentially huge decision. It has received a lot of coverage in the national press, and although the Ombudsman doesn’t work on a precedent basis (which means every case is decided on its merits, so not all cases such as this will definitely be upheld) it does show a significant alteration in their approach to these cases.

Steve Webb, Royal London Head of Policy said– “This is a very important ruling. While individuals obviously have a responsibility to take good care of their pensions and to take proper advice, this ruling shows that pension schemes also have important duties to protect members.”

This is a very recent development but it is clear that this should being into sharp focus the duties of a pension trustee. To not fully comply with them, as was the case here, is to risk liability. A number of large scale employers could be sweating on this verdict. Whether the floodgates will open for historical claims remains to be seen, although it is highly likely that the Ombudsman will now see a large amount of claims for individuals who may have previously felt they had no possibility of securing their lost pension, but have now been given some hope of recoupling funds that were effectively stolen from them.