Changes to TPO processes

The Pensions Ombudsman (TPO) has announced changes to its disputes handling processes, aiming to speed up the resolution of complaints. The Early Resolution Service, which could previously be used as an alternative to a scheme’s internal dispute resolution (IDR) process, is no longer available.

Instead, new incoming complaints must have completed the scheme’s IDR process in all cases. They will then be assessed and directed in one of the following ways:

• If it appears that the complaint can be resolved informally by the parties reaching agreement, the resolution team will investigate the complaint and issue the parties with an informal view and suggested solution (which could include compensation). If the parties agree, the case is closed; otherwise, the matter can be escalated.
• If the case is regarded as having a clear outcome it may follow an expedited decision-making process in which a caseworker issues an initial decision. In a recent blog post, TPO suggested that suitable cases might include:
  1. cases where a pension provider supplied an incorrect benefit statement, but no loss was caused by the error;
  2. complaints about automatic fund switches in a lifestyling investment strategy, where the nature of the strategy was adequately communicated; and
  3. cases where a member wants a scheme to honour a cash equivalent transfer value even though the member caused delay that meant statutory time limits were not. Decisions on these cases will not normally be published. If the parties are not happy, the case will be referred to TPO for a determination.

• The third alternative is the formal adjudication process. Both parties can submit further information and arguments; any attempt to resolve a complaint during an earlier resolution process (such as an offer made by one party) will not be treated as an admission by the party making the offer. An adjudicator will issue an initial decision (with the possibility of referral to TPO for a formal determination if the parties disagree with the adjudicator’s view).

Action points for trustees

Trustees should be aware of TPO’s updated processes in order to be able to respond appropriately as required. TPO has published a factsheet on the role of its resolution team. Standard member communications and scheme booklets that refer to TPO processes should also be checked and updated as relevant, for example to remove references to the Early Resolution Service. TPO has published a factsheet on signposting and a factsheet for members describing its role.

TPO confirms no trustee duty to advise

TPO has dismissed a complaint from a member who withdrew from active membership of a scheme to preserve his lifetime allowance protection, without realising that this would make him ineligible to have a late retirement factor (LRF) applied to his benefits.

The member ceased active membership from March 31, 2016; the scheme was restructured from April 1, 2016, with DB benefits continuing to accrue up to an earnings cap, and a new DC section for earnings above that level. The member had by that stage accrued 11 months’ service after his normal retirement age and qualified for an LRF enhancement. He complained that the trustee had breached a duty of care to him by failing to explain that withdrawing from the scheme without ceasing employment would lead to the loss of the LRF.

The member claimed to have relied on a retirement quotation received prior to his withdrawal in connection with divorce proceedings. The quotation included an LRF enhancement but did not explain that this would be lost if he withdrew from the scheme before retirement. TPO held that the Trustee had to ensure that the quotation complied with legal requirements and was not assuming a separate duty based on a reasonable expectation that the member would rely on it for a different purpose. In addition, the member would have made the decision to withdraw anyway so even if a duty of care had existed, any loss was not caused by reliance on the quotation.

What does this ruling mean for trustees?

The decision is a helpful reminder of established principles. TPO underlined that ‘in providing the quotation, [the trustee] did not have and did not assume a duty of care to [the member] in relation to his decision to withdraw from the Scheme. [It] did not have a duty to anticipate the information he might require for his decisions. Any alternative finding could imply a duty to advise and it is settled law that trustees do not have a duty to advise and indeed are not permitted to do so if not authorised by the FCA’.

High Court decision in missing documents case

A recent High Court case provides useful commentary on situations where documents that form part of a scheme’s historical record cannot be located: Ballard v Buzzard. In this case, the missing  document was a ‘scheme amendment authority’, of which no final and fully-signed version could be found. The Court made findings of fact, based on two part-signed drafts plus witness evidence, that the document had been fully signed and that the contents of the draft were the execution version.

The Court went on to order rectification to resolve a separate problem with the signature blocks for this and other documents, confirming their validity – and, on the basis of those documents, it also ordered rectification of a later consolidating deed.

What does this ruling mean for trustees?

The Court’s use of secondary evidence to resolve problems with missing documents is of particular interest in the light of current concerns around the potential implications of the Virgin Media case. A similar approach has potential to assist schemes that have difficulty locating actuarial confirmations provided for historic amending deeds.