Cas 67622 R2B2 · CAS-67622-R2B2

CAS-67622-R2B2

Ombudsman’s Determination Applicant Mr H

Scheme Aegon UK Staff Retirement And Death Benefit Scheme

Respondents Trustee of the Aegon UK Staff Retirement and Death Benefit Scheme (Trustee for the Ceding Scheme)

Mercer Limited (Mercer)

Scottish Widows Platform, trading as Embark Investment Services limited (Scottish Widows Platform)

Complaint Summary Mr H has complained that his request to transfer his benefits from the Scheme to his Self- Invested Personal Pension (SIPP) was delayed causing him to suffer a financial loss.

Summary of the Ombudsman’s Determination and reasons The complaint is not upheld against the Respondents because whilst some delays arose, this was due to confirming information that was reasonably necessary and relevant, and the delays were not excessive and did not breach the statutory time limits.

1 CAS-67622-R2B2 Detailed Determination Material facts

Mr H was a member of the Ceding Scheme where he held benefits for two separate periods of service. He requested to transfer the benefits from the Ceding Scheme to the SIPP.

Mercer, the then Administrator of the Ceding Scheme, made the transfer in two payments, reflecting each period of service.

First Period of Service

On 30 June 2020, Mercer sent Mr H’s IFA a transfer pack for his first period of service (the First Period of Service). This included a Cash Equivalent Transfer Value (CETV) of £67,408.94, guaranteed until 18 September 2020. The correspondence said that the transfer value should not be requested, unless Scottish Widows Platform had all documentation and information necessary to invest the funds.

On 9 September 2020, Scottish Widows Platform received Mr H’s transfer in forms. The paperwork was completed to initiate the transfer.

On 1 October 2020, Mr H’s final signed transfer documentation was received by Mercer.

On 6 October 2020, Mercer sent the transfer payment for the First Period of Service.

On 12 October 2020, Scottish Widows Platform received the transferred funds in relation to the First Period of Service. Scottish Widows Platform deemed it had insufficient information to apply the funds to Mr H’s SIPP account, so, on 13 October 2020, it asked Mercer:

• Does this transfer form part of a block transfer?

• Does the member have 6 April 2006 protected tax-free lump sum rights?

• Do the Money Purchase Annual Allowance (MPAA) rules apply?

Scottish Widows Platform chased the information request, by way of an email, on 15 October 2020. On 19 October 2020, it spoke to Mercer who confirmed the payment was uncrystallised, but it could not respond to the other questions.

On 23 October 2020, Scottish Widows Platform initiated a return of Mr H’s transfer, to the Ceding Scheme, in line with Financial Conduct Authority’s Client Assets Sourcebook (CASS) rules, to protect the client’s money.

On 27 October 2020, Mercer responded to Scottish Widows Platform’s questions. It incorrectly advised that the MPAA rules applied to the transfer. This led to further questions from Scottish Widows Platform.

2 CAS-67622-R2B2 On 6 November 2020, Scottish Widows Platform telephoned Mercer to chase the outstanding information followed by an email, and, on 10 November 2020, Scottish Widows Platform sent another chaser.

On 16 November 2020, Mercer responded, confirming that the MPAA rules did not apply as the transfer concerned a Defined Benefit arrangement. It advised that it would arrange for the transfer to be re-sent to Scottish Widows Platform.

On 26 November 2020, Mercer re-sent the transfer to Scottish Widows Platform.

On 27 November 2020, Scottish Widows Platform allocated a payment of £67,408.94 to Mr H’s SIPP account.

Second Period of Service

On 3 July 2020, Mercer issued a transfer quote for Mr H’s second period of service (the Second Period of Service). This gave a transfer value of £664,084,30 guaranteed until 18 September 2020.

On 9 September 2020, Scottish Widows Platform received Mr H’s transfer in forms. The paperwork was completed to initiate the transfer.

On 1 October 2020, Mr H’s final signed transfer documentation was received by Mercer.

On 19 October 2020, the IFA’s Business Relationship Manager telephoned Mercer for an update on the transfer. Mercer advised that it was waiting for an authorised signature to proceed with the transfer. During this call, Mercer was asked the same three questions as on 12 October 2020 in relation to the transfer for the First Period of Service. Scottish Widows Platform required this information so that on receipt of payment, it could apply the funds to Mr H’s account.

On 30 October 2020, Mercer sent a payment confirmation of £664,084.30 to Scottish Widows Platform. The payment was received by Scottish Widows Platform on 3 November 2020. Scottish Widows Platform deemed it did not have sufficient information to apply the funds to Mr H’s SIPP account. It re-requested the further information it had asked for on 19 October 2020.

On 5 November 2020, Mr H’s IFA made a complaint to Mercer. He said that he had not received responses to his emails and that Mr H had made a formal complaint.

On 6 November 2020, Scottish Widows Platform telephoned Mercer to chase the outstanding information.

On 9 November 2020, Mercer acknowledged the complaint from the IFA. The IFA responded and said that the client had suffered a significant financial loss.

On 9 November 2020, Mercer told Scottish Widows Platform that the transfer was uncrystallised and none of the questions it had asked applied to the transfer. As a

3 CAS-67622-R2B2 result, on 11 November 2020, Scottish Widows Platform was able to allocate the payment to Mr H’s SIPP account.

On 13 November 2020 and 17 November 2020, the IFA chased Mercer for an update regarding the complaint.

On 8 December 2020, Mercer replied to the IFA. It confirmed that the transfer had been made and that it would respond to the request for compensation in due course.

On 10 December 2020, the IFA informed Mercer that the losses due to the delays were in excess of £23,000. He provided a spreadsheet that Scottish Widows Platform had produced to support this claim. Scottish Widows Platform later said these calculations were incorrect as it had recorded an incorrect number of units purchased.

On 6 January 2021, the IFA chased Mercer for an update. This was repeated on 27 January 2021.

On 10 February 2021, the IFA said to Mercer that in the absence of a substantive response and no details of the Internal Dispute Resolution Process (IDRP) he intended to escalate the complaint.

On 24 February 2021, Mr H complained to Scottish Widows Platform. Scottish Widows Platform did not uphold his complaint. It said that whilst there were delays in applying the funds to his account, it was caused by Mercer who had delayed providing the required information in a timely manner.

On 27 April 2021, Scottish Widows Platform provided corrected best pricing calculations as requested by Mr H and as a good will gesture.

In February 2022, Mr H complained to the Trustee of the Ceding Scheme. The Trustee of the Ceding Scheme responded on 4 May 2022, and said that the questions asked by Scottish Widows Platform were not relevant to a Defined Benefit transfer, and Scottish Widows Platform should have realised Mercer had made an error when it advised the MPAA rules applied. Further, the transfer documentation issued by Mercer had advised that payment should not be requested unless all documentation and information necessary to invest the funds had been received. The Trustee of the Ceding Scheme accepted that whilst the payment in relation to the First Period of Service was made promptly on 12 October 2020, the payment with respect to the Second Period of Service was unnecessarily delayed until 30 October 2020. It said that both payments could have been made and subsequently invested on 12 October 2020. The Trustee of the Ceding Scheme agreed to uphold Mr H’s complaint for the Second Period of Service and to compensate him for any loss suffered because of this delay.

In response, Mr H said that the market had recovered significantly between 30 October 2020 and the date of unit purchases on 11 November 2020. If Scottish Widows Platform had been able to buy units on 30 October 2020 when the transfer

4 CAS-67622-R2B2 was sent or, more realistically, on 3 November 2020, then he would have received more units than he eventually did in November 2020. He said that the Trustee had not addressed the admitted error by Mercer in providing Scottish Widows Platform with incorrect information. In response, the Trustee said they did not agree with Mr H as to the reason for the loss. The Trustee said that Scottish Widows Platform was at fault for requesting the transfer before it had all the necessary information to apply it.

On 5 August 2022, Mercer wrote to Mr H following its loss assessment calculations. It said that it had calculated the difference in the transfer value for the Second Period of Service as if the payment had been made on 12 October 2020 rather than 30 October 2020. Based on the unit prices provided by Mr H on 28 June 2022, it had calculated a loss of £250.79. Mr H did not accept the offer. He submitted that the Trustee ought to calculate the number of units of each fund on 30 October 2020 (or 3 November), the date he felt the transfer ought to have completed.

Summary of Mr H’s position

Either the Trustee of the Ceding Scheme or Scottish Widows Platform, or both were to blame for the transfer delays and the consequential loss.

The market had recovered significantly between 30 October 2020 and the date of unit purchases in November 2020.

If Scottish Widows Platform had been able to buy units on 30 October 2020 when the transfer was sent or, more realistically, on 3 November 2020, then he would have received more units than he eventually did in November 2020.

The Trustee for the Ceding Scheme had not addressed the admitted error by Mercer in providing Scottish Widows Platform with incorrect information.

Mr H provided further comments. In summary: -

• There is no statutory definition of maladministration, and the respondents did not act in his best interest with a catalogue of mistakes, avoidable delays, and miscommunications, which indicate maladministration.

• When the respondents were not communicating with each other, Mr H and his IFA were constantly reaching out to the respondents to get the process on track.

• The respondents were not trying to ascertain the correct position and there would have been no need to ascertain the correct position if the correct information had been required and supplied first time in a competent fashion.

• Mercer had made an error and Scottish Widows Platform compounded this by incompetently asking for information for the wrong scheme type.

• His case was not complex. He was not treated fairly, both parties put their own inadequate internal procedures ahead of his interests. He suffered significant financial loss as a result.

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Summary of Scottish Widows Platform’s position

All the questions it asked were standard and necessary for it to be able to apply the funds to Mr H’s SIPP account.

These questions were not included with the original paperwork, or the email sent to Mercer on 1 October 2020 when the final paperwork for the transfer was sent. In relation to the First Period of Service it had asked the questions on 13 October 2020. In relation to the Second Period of Service it had asked the questions on 19 October 2020 and 6 November 2020.

Where the information was not included in the paperwork or the transfer confirmation letter, it would then request this information. The questions were:

• Does this transfer form part of a block transfer?

• Does the member have 6 April 2006 protected tax-free lump sum rights?

• Do the MPAA rules apply?

It chased the information it needed on numerous occasions and was bound to return the transfer due to CASS rules. Whilst there were delays in applying the funds to Mr H’s account, these delays were not caused by Scottish Widows Platform, but rather by Mercer not providing the required information in a timely manner.

Regarding its Service Level Agreements for matching the received cash to the transfer in expectation, it had a one working day target, assuming receipt of all necessary information.

Summary of the Trustee for the Ceding Scheme’s position

It accepted that the transfer in relation to the Second Period of Service was delayed and could have been made at the same time as the first transfer, on 12 October 2020. Its offer to pay the loss between 12 October 2020 and 30 October 2020 (when the second transfer was sent to Scottish Widows Platform) was fair.

It accepted Mercer made an error in its reply to Scottish Widows Platform but did not accept that this caused a delay. If Scottish Widows Platform had obtained all the information it needed before requesting the transfer, it would have recognised the incorrect answer was a mistake. The delay was caused by Scottish Widows Platform not ensuring it had all the information before requesting the transfers.

The information requested by Scottish Widows Platform was not relevant to a defined benefit pension transfer and Mercer said it formed part of the transfer paperwork.

6 CAS-67622-R2B2 Conclusions

Furthermore, the delays were not excessive, from 12 October to 27 November for the First Period of Service, and 3 November to 11 November for the Second Period of Service. There was also no extended period of inactivity, rather the parties were trying to ascertain the correct position in relation to the further information requested. Mr H argued that there would have been no need for this, if the correct information was requested and supplied initially. But there is a reason why there are statutory timeframes for pension transfers – schemes need to get the transfer right and often need time to ascertain or clarify matters but also need to do so in a reasonable time fashion. For reasons I have explained above, the information was considered necessary, the delays were not excessive, and the transfer proceeded within the statutory timeframes, so I do not find that there was any maladministration in this case.

Camilla Barry

Deputy Pensions Ombudsman 26 February 2025

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