Reassure Personal Pension Plan · CAS-38919-G3G7

CAS-38919-G3G7

Ombudsman’s Determination Applicant Mr T

Scheme ReAssure Personal Pension Plan (the Plan)

Respondents ReAssure Limited (Reassure)

Outcome

Complaint summary

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

On 30 June 2015, the Optimum Scheme was established by trust deed and registered with HM Revenue & Customs as an occupational pension scheme. It was administered by Optimum Financial Solutions Limited (Optimum), a company regulated by the Financial Conduct Authority (the FCA).

Mr T says that, in August 2016, he received an unsolicited contact from his cousin who was associated with a firm called Pension Analysis. He trusted his cousin as he understood him to be a financial adviser. He says his cousin told him that he would receive better investment returns if he transferred his pension from the Plan to the Optimum Scheme. He further says that his cousin spoke to all relevant parties on his behalf thereafter and that the pension companies did not contact him directly. It was only later that he realised his cousin was not a regulated financial adviser.

On 18 October 2016, an administrator, acting on behalf of the Optimum Scheme, wrote to Reassure enclosing a letter of authority (LOA), signed by Mr T. The LOA asked Reassure to provide information regarding the Plan to Optimum. CAS-38919-G3G7 On 19 October 2016, Reassure wrote to Mr T thanking him for his enquiry about transferring the Plan. It quoted the current transfer value (the quote) and explained that if he wished to proceed with a transfer, he would need to provide Reassure with a completed Transfer Payment Release Form (the Form) and the original policy document.

The evidence shows that enclosed with the quote was a leaflet entitled ‘Scammed out of his retirement – Don’t be next’. This leaflet is known as ‘the Scorpion leaflet’ due to the imagery used and warns of the signs of possible scams including being recommended by a friend to transfer. It also said to be wary of cold calls, to check everything personally and to be sure the adviser is regulated by the FCA.

On 15 November 2016, Optimum wrote to Reassure to confirm that the Optimum Scheme was a registered Occupational pension scheme. A copy of the Optimum Scheme’s HM Revenue & Customs registration certificate was enclosed.

Also enclosed with the letter was the completed Form apparently signed by Mr T on 3 October 2016. The Form had also been signed by an administrator on behalf of the Optimum Scheme on 15 November 2016.

On 21 November 2016, Reassure wrote to Optimum Retirement Benefits to confirm that the transfer value had been paid.

In February 2018, Optimum was wound up following confidential investigations carried out by the Insolvency Service. Further investigations by the Official Receiver established that Optimum had failed to keep adequate records, did not provide information to the tax authorities and was derelict in its duty to provide Optimum Scheme members with up to date information, such as personal statements.

The sole director of Optimum claimed that he was not personally involved in the promotion of the Optimum Scheme. However, the Pensions Regulator (TPR) published a report in June 2018 that proved Optimum did play a role. Furthermore, despite being regulated to deal with insurances and mortgages, the director confirmed that neither he nor anyone else at Optimum had permission to talk to potential clients about pension schemes.

TPR’s report also highlighted that the Optimum Scheme was not being run in an appropriate manner and there were serious concerns over the status of members’ funds. On 13 February 2018, TPR exercised its statutory powers to appoint Dalriada as trustee of the Optimum Scheme. It appeared that the previous trustee had used the assets to make several high-risk investments that were now worthless.

On 30 July 2019, Mr T complained to Reassure through a solicitor. The solicitor said that Reassure had failed to conduct any due diligence in respect of the Optimum Scheme. Furthermore, Reassure did not engage directly with Mr T to explain the risks of pension liberation and ‘scams’.

2 CAS-38919-G3G7 Specifically, the solicitor argued that Reassure should have obtained basic information about the Optimum Scheme, such as:

• type and legal status of the scheme;

• date scheme was established;

• location of the scheme and any administrators;

• details of any employment link between the Optimum Scheme and Mr T;

• marketing methods used;

• details of any cash payment being offered;

• investment choice;

• provenance of the Optimum Scheme; and

• details of who provided advice to transfer.

The solicitor said that had Mr T received a warning from Reassure he would not have transferred his pension.

Reassure responded on 19 August 2019, rejecting Mr T’s complaint. It said that the Optimum Scheme was sponsored by an FCA authorised adviser. Although Reassure had dealt directly with the adviser, it had been given authority to do so by Mr T. It also confirmed that the Scorpion leaflet had been included with the transfer pack and that it was reasonable for it to assume that this would have been passed to Mr T by the Optimum Scheme administrator. The Form had been signed by Mr T and, as this was a statutory transfer, Reassure had therefore paid the transfer funds in accordance with his instructions.

Adjudicator’s Opinion

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Mr T did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr T provided his further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the following additional points raised by Mr T.

Mr T repeats that he does not recall receiving the Scorpion warning and did not expect Reassure to transfer his pension into a scam.

He says the evidence falls short of showing that the Scorpion leaflet was included in the transfer pack which was addressed to him. He argues that any inference should be drawn in his favour and it is certainly not sufficient for Reassure to rely upon a footnote in a letter to put him on enquiry nor is it sufficient, when one considers TPR’s guidance available at that time, for Reassure to rely on an expectation that Optimum would issue the warning him.

He argues there were several features that should have flagged a potential scam, including:-

• He was an unsophisticated investor who was financially stable and had no pressing need to transfer his pension.

• There was no link between the receiving scheme and his employment.

The complaint should be upheld therefore, on the basis that Reassure:-

• Failed to send the Scorpion warning leaflet to Mr T notwithstanding TPR’s guidance which had been around since 2013.

• Failed to engage directly with Mr T as to the concerns it should have had with the transfer request.

In the case of Hughes v Royal London, Ms Hughes was self-employed, so joining a small, self-administered pension scheme with her own company as sponsor would not necessarily be of concern. In contrast, Mr T’s proposed transfer was to another occupational pension scheme based over one hundred miles away.

6 CAS-38919-G3G7 Ombudsman’s decision I acknowledge that Mr T says he cannot recall having received the Scorpion leaflet. The events he is complaining about took place some years previously and there would have been a number of documents issued to him with the quote, so it may be that he has forgotten this particular leaflet. Furthermore, he has said that he left all the paperwork to his cousin to deal with so I accept it is possible that he was not shown this document.

But I cannot hold Reassure to account for how Mr T chose to manage his own affairs. I can only consider what is more likely than not to have happened based on the evidence available. In this instance, the evidence shows that the Scorpion leaflet was enclosed with the quote issued to Mr T and if this was withheld from him that is not something that Reassure can be held responsible for. Further, if the quote was issued via Optimum then, as the Adjudicator has pointed out, it would have appeared to Reassure at the time that Mr T was being advised by an FCA regulated firm of some years’ standing so that Reassure would have reasonably expected such a firm to ensure that it dealt with its clients in an appropriate manner, regardless of its specific permissions.

I note the distinction made between the circumstances of the Hughes v Royal London case and those applicable here, but that distinction is to miss the point. The effect of the Hughes case is that it effectively did away with the link between the applicant’s earnings and the sponsoring employer of the receiving scheme, regardless of the type of scheme involved.

I sympathise with Mr T and the position he now finds himself in, but I have to consider the situation as it was presented to Reassure at the time. Mr T had a statutory right to transfer his benefits from the Plan and he appeared to be dealing with an FCA regulated firm. Reassure was expected to consider the information and decide if there was a legitimate reason to refuse the transfer. It did so and concluded there was nothing to indicate anything untoward. This was a reasonable conclusion in the circumstances. I cannot apply the benefit of hindsight to the situation.

I do not uphold Mr T’s complaint.

Anthony Arter CBE

Deputy Pensions Ombudsman 16 August 2023

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