Prudential has lost an appeal after the Financial Ombudsman Service ruled that sending out forms by post caused a client delays in taking three of his pensions.
In November 2016 the client, referred to in the FOS decision as Mr B, said he wanted to take all three of his pensions with Prudential at the same time and purchase an annuity.
Prudential gave him the option of taking all three immediately or waiting until the last one matured.
During a phone call in January, Mr B discussed what form of annuities he wanted, but Prudential told him it could not arrange these by phone and sent quotes to him by post.
Later that month, Mr B had chosen to take all his pensions together. However, the forms did not reach him in time as he lived abroad.
In an initial decision, a FOS adjudicator ruled that the provider should have done more to facilitate access to the pensions, and should put him back “in the position he’d be in if he’d been able to set up three annuities to start at the same time.”
Prudential challenged the ruling, arguing that during the January call, Mr B only instructed the provider to take the first of the available annuities, and cancelled the other two instructions before deciding on the correct course of action.
The provider argued that while it was able to send application forms for an enhanced annuity to Mr B electronically, sensitive information contained the rest of the application meant it had to be sent by post.
The ombudsman has upheld the complaint, however.
While he acknowledges that no clear instructions were given on one call in January, a further call later in the month did explain clearly that the remaining two pensions were to be converted to annuities and the process should start that day.
Mr B’s wife did also explain the length of time it would take to receive the necessary forms.
The ombudsman writes: “I accept that Prudential wasn’t responsible for how post was processed, but I think Mr B had made his intentions clear and more should’ve been done to get quotes to him that he could’ve accepted – Mr B had set out the problems he’d had with the post at some length and in previous calls. I think if he’d received the quotes generated on 22 January 2017 he would’ve accepted them and I think there was enough time to arrange an annuity to start on 1 March 2017.”
The original compensation calculation, with Mr B paid the annuity payments he would have received if they had started on time, stands, including an 8 per cent per year simple interest on these amounts to rectify the period he did not receive his pensions for.
The ombudsman writes: “[The 8 per cent] isn’t something Mr B would’ve had if the annuities had been set up earlier. Instead it’s designed to compensate him for the time he was out of pocket. Mr B has said he’s had to use money from some of his other assets to cover his outgoings whilst he’s been waiting for his pensions, so this is designed to compensate him for that.”