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AJ Bell urged to review processing of death benefits

Anthony ArterThe Pensions Ombudsman has “strongly” recommended AJ Bell reviews the way it deals with death benefits in nomination forms.

In an upheld ruling, TPO says AJ Bell Trustees and AJ Bell failed to check whether the details on a deceased member’s nomination form were accurate.

The member, known as Mr M, died on 4 November 2013 and was a member of a SSAS called Simply Tiles Ltd Directors Pension Scheme, along with his former spouse Mrs E and brother Mr S.

In this case AJ Bell was the scheme’s administrator and AJ Bell Trustees was the professional trustee.

Mr M died in active membership and was survived by his three adult children, Miss A and her two sisters.

Miss A complained that the trustees failed to properly consider her rights, and those of her sisters, when exercising discretion in relation to the scheme death benefits following the death of their father.

Miss A says that while the nomination form, which the trustees are relying on, was completed in 2004, and signed by Mr M, the original nomination details were not completed by him.

Miss A says her uncle, the deceased’s brother Mr S, later changed the nomination in his favour and initialled the changes.

Miss A also says there is no evidence that Mr M was aware of the change in the nomination, or even of the original nomination.

Miss A adds that the trustees’ decision to award the death benefit to Mr S is perverse.

She says the period since Mr M’s death has been marked by persistent bad administration by the professional trustee and the administrator, causing substantial delay and distress.

In the ruling, ombudsman Anthony Arter says the circumstances and manner in which the nomination form was completed make it invalid and the trustees should not have relied on it when making their decision.

Arter also says the trustees did not consider what Mr M’s wishes would have been shortly before his death and when approving his will.

Arter says the fact “two of the three trustees are conflicted [Mr S and Mrs E]” and “one made an improper amendment to an nomination form [Mr S], which was to his financial advantage and the other two failed to notice this irregularity when purporting to exercise their joint trustee discretion”.

He says: “Here, the trustees had access to all the necessary information but failed to request other evidence and instead gave maximum weight to an invalid nomination form.

“Having decided to review again, they then adopted a similarly inappropriate process of reconsideration. These were actions that no reasonable trustee would have carried out.

“In the circumstances, I have decided to assess the distribution that a reasonable trustee would make.”

Regarding the adviser in the case and their role in checking the accuracy of information on the nomination form, the ombudsman says that the adviser failed to fulfill obligations in his dealings with Mr S and the trustees.

He adds the adviser at the outset, arranged for the SSAS to be established
with AJ Bell but provided no advice on the role and responsibilities of trustees or
the importance of maintaining correct documentation.

Furthermore the ombudsman asked the adviser whether he had provided any advice or mentioned the role and responsibilities of trustees to Mr S and his fellow lay trustees.

In his response the adviser said, in effect, that the trustees were responsible people and had to take responsibility for their own actions.

Arter says he finds this to be an irresponsible reply as the adviser had a duty to provide information on the SSAS and highlight not only the advantages of the SSAS but also the risks and administrative requirements of such a scheme.

To make things right Arter directs 75 per cent of the scheme assets attributable to Mr M are to be paid, in equal shares, to Miss A and her two sisters.

The remaining 25 per cent of Mr M’s assets are to be paid to Mr S.

AJ Bell has been ordered to pay £6,000 to Miss A and her two sisters, divided into equal shares, for the exceptional distress and inconvenience this has caused them.

Arter says: “Miss A has also mentioned that the case has caused considerable distress to both her and her sisters and that this issue has been ongoing for over three years. I agree and sympathise with the position that Miss A and her sisters find themselves in… I strongly recommend that AJ Bell Trustees and AJ Bell review their processes for dealing with similar cases in future.”

A spokesman for AJ Bell says: “This case highlights the importance of ensuring expression of wishes forms are completed properly and kept up to date.

“It also illustrates the complications that can be created by providers having discretion over the payment of pension death benefits, something we have urged the government to change.

“However, we accept that this case took longer to resolve than it should have and respect the ombudsman’s decision.”


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