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FOS rejects pension transfer complaint on time barring rules

A decision by the Financial Ombudsman Service to reject a pension transfer complaint based on the time barring rules could help advisers defend future claims.

The FOS has rejected a complaint against an advice firm, which wishes to remain anonymous, for advice given in 2000 to transfer from a final salary pension scheme to a personal pension.

The complaint was made in 2012 but the FOS found it was time barred as the consumer received a statement in December 2007 showing the estimated pension she would
receive was considerably less than her former scheme.

Consumers have six years from the event of the complaint to submit a claim to the FOS. If later, they have three years from when they knew or ought to have reasonably known they had cause to complain.

The complainant argued that her cause for complaint only became apparent in 2011 as she had been assured by the adviser to expect the transfer value of the policy to be low initially but to grow in later years. She also argued she had been affected by poor health, which delayed her ability to bring a complaint.

But in a decision sent to both parties earlier this month, ombudsman Gideon Moore says: “The projection the complainant received in December 2007 ought reasonably to have made her aware of her cause for complaint. She was sufficiently close to age 55 by that point [within five years] for the conclusion that she should have remained in her previous scheme to be inescapable.”

Moore added that the complainant’s illness did not constitute “exceptional circumstances”.

The decision will not be published on the FOS website as it has been rejected on time-barring grounds. 

Dispusolve director Peter Turner, whose firm specialises in handling complaints for financial services firms, says: “Consumers receive a statement each year but usually only complain when they reach retirement. However, this decision shows if advisers receive a similar complaint, the first thing they should do is get hold of these projections.”

DWF partner Harriet Quiney says: “It is important to note the consumer would have had to compare two separate documents in order to make the comparison between the policies and start the clock running for the complaint.

“This decision gives advisers clues to what to look for when considering stale complaints and shows the FOS is doing exactly what it should be: making a decision based on its rules, which is fair and reasonable, and making it clear exceptional circumstances must be truly exceptional.”

Adviser views


Alistair Cunningham, director, Wingate Financial Planning

The time barring rules are there to stop consumers receiving advice and waiting 25 years until they retire to bring a complaint. If the advice was unsuitable it should have been demonstrable as unsuitable at any point so why did the consumer wait so long to complain?


Highclere Financial Services, partner, Alan Lakey

If a statement is clear enough for an ordinary person to understand its meaning, it is reason-able for this to start the clock running. But while this decision appears sensible, it goes against past FOS decisions on endowment complaints.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. This sounds like a late try-on that has been rightly rejected.

  2. Seems to me it’s nothing to do with original advice but rather about performance which this client is unhappy with. Good to see the FOS can occasionally come to the right decision !!

  3. I doubt many advisers will be losing sleep that the FOS resisted its usual inclination to act as a consumer champion. But the decision does raise three points:

    – Presumably the argument is that the projection in 2007 would have shown the likely annuity under 5%, 7% and 9% growth and even under the “high rate” growth it would have failed to match the old scheme, hence this should have alerted the investor that they’d been sold a pup. This does however overlook two important points: that statutory projections are bullshit, and nobody reads them.
    – What’s the significance of being close to age 55? Minimum retirement age was 50 in 2007. It’s possible it might have been the client’s selected retirement age but it seems a bit unlikely.
    – The advice was to transfer out of a final salary scheme into a personal pension, in 2000 – let’s face it, it would almost certainly have been upheld but for the time bar.

    If people are going to be told that they can’t just sail blithely through financial life because if anything goes wrong 20 years later the FOS will sort it out, and that they actually have to pay attention to their finances on an ongoing basis, that would be great. I’m just not sure this is much of a precedent.

  4. Common sense prevails, at last. Time for the general public to grow up and take some responsibility themselves. Living in a US-style “blame culture” is unhealthy.

  5. I bet Nic’s all over this one next week!

  6. @Sascha Klauß – the issue with this case was specifically that the complainant said she wanted to retire at 55 at outset and the reprojections were to that age.

    Although the decision does not refer to it, some time spent on Google showed throughout the period when she claimed to be too ill to complain she had been involved in voluntary work throughout – including some quite high profile photographs – so I thought the complainant’s argument was less than fully persuasive.

    Picking up on Alan’s point about endowments, there is no equivalent to the red letter for pension mortgages – so if you have sold any, it would be advisable to keep copies of reprojections

  7. I would be delighted if this is going to be the future stance from FOS.
    It is because, in the past, the FOS seemed very reluctant to rule any complaint out of time by utilising the 6 & 3 year rules that the pressure exists to reintroduce long stop.
    If FOS has a consistent approach to the 3 & 6 year rule there will be far less need for the long stop.

  8. Incompetent Regulators 27th October 2014 at 10:34 am

    It would have been a travesty to uphold this complaint when we now have full access to our pension funds from April 2015!

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