LV= will not have to pay further compensation to an investor who complained about a delay in transferring funds held within an LV= Sipp.
The Pensions Ombudsman has rejected the complaint, which contested that if the transfer was made earlier then a communication error and switch of funds would have been discovered more quickly.
The complainant, Mr Y, held two investment funds within the LV= Sipp: £3,110 in a Threadneedle 6 money market fund and a Canada Life investment valued at £119,240 that was also invested in a money market fund.
He also held a further £2,117 in a cash account.
The complainant’s adviser recommended he transfer the Canada Life investment out of cash and contacted LV= in October 2013 to get information on the provider’s insured medium risk funds. The email referred to the Canada Life fund being in cash.
In April 2014, the adviser instructed LV= to switch Mr Y’s fund into three other funds. LV= took this as a request to switch the £3,110 in the LV Threadneedle money market fund to the new LV= insured funds.
However, the adviser said his intention was for only the Canada Life funds to be transferred.
Misunderstanding over which fund should have been transferred continued until the end of that year with the adviser and LV= trying to establish what had happened through several emails from September to December.
The Canada Life transfer took place on 5 December 2014 but an exit penalty of £5,532.66 was applied. Upon discovering the exit fee, the funds were transferred back to Canada Life, which happened on 5 January 2015.
Mr Y and the adviser said they were both unaware of the exit penalty and so Canada Life agreed to reinstate the funds without cost, so long as the investment stayed with Canada Life.
However, the adviser did not instruct Canada Life to move out of the cash fund until July 2015.
Mr Y wanted compensation for loss of investment returns while the investment remained in cash until July 2015.
The adviser argued the instruction to switch on 9 April 2014 was intended for the Canada Life fund only and not the LV Threadneedle fund that was transferred.
However, LV= says the instruction to switch on 9 April 2014 was not an instruction to “surrender and transfer” the Canada Life investment to LV=. The provider believes it carried out the right instruction.
LV= did say it could have been more proactive between September 2014 and December 2014 and that delays did occur. It offered Mr Y £500 in compensation for distress and inconvenience.
Mr Y did not accept the offer and complained to TPO. An adjudicator said the £500 was reasonable, which Mr Y also did not accept so the decision was passed to an ombudsman.
Deputy pensions ombudsman Karen Johnston agreed with the adjudicator and did not uphold the complaint.
She highlighted that, in the context of pension terminology, the word “switch” usually indicates an internal move with the same provider.
The decision says: “A transfer would usually indicate transferring from one provider to another. The 9 April 2014 email did not include the surrender of a non-LV fund. The request of 9 April 2014 would therefore be more likely to indicate a switch from one LV investment fund to another, not a transfer.”
Johnston also said she could not order LV= to pay further compensation because of inaction by Mr Y and the adviser after the transfer of the Canada Life fund was reversed when the funds remained in the Canada Life cash fund for a further six months.