The acronym FOS can strike fear into the hearts of advisers. POS, on the other hand, may elicit a shrug at best. The Pensions Ombudsman Service is like a younger brother to the Financial Ombudsman Service. However, while the POS has just 47 staff compared with the FOS’s 3,000 or so, its decisions have far-reaching consequences for savers and advisers alike.
Law firm Eversheds’ former head of pensions Anthony Arter took the helm at the ombudsman in February 2015 and embarked on an ambitious plan to overhaul the service.
When Money Marketing met Arter at the headquarters the POS shares with The Pensions Advisory Service, it was just before a crucial High Court decision that many fear may open the floodgates to a raft of pension scams.
Last July, Arter ruled against Royal London customer Mrs Hughes, who had argued the provider’s attempts to block her transfer to a suspicious SSAS were unlawful.
The ombudsman backed Royal London but the High Court overturned his ruling, arguing there was no legal reason why the transfer, part of a plan to invest a small pension in Cape Verde, should not go ahead.
Arter says there are around 200 cases held up on the same point of law and Money Marketing has subsequently revealed providers have received renewed transfer requests quoting the Royal London case as evidence.
But Arter says pension liberation cases such as these are dropping off. He believes the automatic enrolment market instead will fuel complaints for the next decade.
He says: “In the future, my complaints will be around auto-enrolment. Once you have all the SMEs and people employing a single person and you’ve got 10 million people coming into pensions for the first time, there are going to be issues.
“For example, you could have someone who employs a nanny. They will say ‘I can’t be bothered with all this paperwork and setting up a pension arrangement. How about if I just give you an extra £20 a week?’
“We should be picking up the phone and explaining why a complaint will or won’t go somewhere…there and then.”
“The nanny may plan to work in the UK for only a summer but actually, in a few years’ time after they have decided to stay in the UK, they may think they’ve been ripped off.
“They may value a pension as they get older and think they should not have been encouraged not to be enrolled, and may bring their complaint to the Pensions Ombudsman.”
While he expects liberation cases – which make up around 15 per cent of the total – to fade away, Arter questions how far the industry both can and should go to stop customers making potential mistakes.
“If you think about liberation, it’s a difficult area. How much do you protect the individual if they have been warned and told of the dangers? Do you refuse to let them do something just because you think it’s rubbish? You may be wrong, and how far do you go before you allow someone to take their money and throw it in the river?”
Despite its lower profile, the POS has greater powers than the FOS. It is not subject to a cap on payouts and, once a decision is made, complainants can only attempt a judicial review or go to the High Court to contest a point of law.
In contrast, the FOS decides what is “fair and reasonable” and binds only the respondent, not the person making the complaint.
But Arter is keen to boost the efficiency of the POS. He wants to drastically speed up the time it takes to rule on a case and ensure greater protection for individual customers.
He says: “It takes far too long to deal with complaints. They go through an internal dispute resolution procedure, often two stages, and then they come to me. But I’d like that internal process to be much quicker so you don’t have complaints taking four years to complete.”
This change in approach appears already to have made an impact. In 2014/15 the ombudsman concluded 44 per cent of complaints informally and 56 per cent formally. For 2015/16 the ratio is reversed, with informal conclusions accounting for 58 per cent.
Arter notes reducing paper communication in favour of dealing with new complaints directly over the phone has brought quicker flagging of cases that were either doomed to fail or had a chance of success.
“I’m keen to change how we operate. The traditional way has been with papers going backwards and forwards. We should be picking up the phone and explaining to the consumer why a complaint will or won’t go somewhere. It can be dealt with there and then and they know it is being dealt with, instead of having to draft letters and wait for a response. We have cut that down now.”
Communication is a key concern, both to customers within the complaints process and to the broader market.
Arter says: “From April I will publish opinions of interest and all opinion determinations.
“The other decision is to anonymise. We will be removing personal identifying information from published decisions. With the amount of fraud on the internet now, it’s an unnecessary risk to the public.”
May 2015-present: Head of Pensions Ombudsman Service
2005-13: Head of pensions, Eversheds
2009-14: London senior partner, Eversheds
What’s the best advice you’ve received in your career?
To maximise my savings in pensions.
What has had the most significant impact on financial advice in the past year?
The freedom for the over-55s to use their pension savings however they wish.
What keeps you awake at night?
Nothing, because I have an excellent and experienced team who passionately believe in providing the public with a fair and impartial service.
If I was in charge of the FCA/TPR for a day, I would…
Continue building the essential excellent relationship between the two bodies that has begun under the leadership of TPR chief executive Lesley Titcomb and FCA acting chief executive Tracey McDermott. This is vital to reduce fraudulent activity and to ensure proper oversight and supervision of the increasing number of master trusts.
Any advice for new advisers?
Communicate with the parties, both verbally and in writing. Do not form an opinion until you are sure you have all the facts.