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Prudential defeats complaint it transferred wrong funds out of pension

Client claimed Prudential transferred money out of the wrong funds in his pension

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The Prudential building on Laurence Poutney Hill, London. Picture by David Parry.

Prudential has won a case at The Pensions Ombudsman after a client claimed that the provider transferred assets out of the wrong funds in his pension.

The client, referred to as Mr L, said he had intended for Prudential to transfer £15,168 from the cash fund in his personal pension alone, but the provider had in fact used three of the funds in the policy, not just the cash fund.

Mr L had benefits in the Universities Superannuation Scheme as well as his Prudential personal pension, which he moved into the cash fund before looking to transfer the cash fund into a Hargreaves Lansdown Sipp.

The transfer completed in September 2014, and Mr L complained to Prudential in April 2015 when he realised the wrong funds had been used and he still had to pay the personal pension’s fund charges.

Prudential said that only the sum to be transferred had been specified and that, because the transfer came through Origo’s Options service, it would be Hargreaves’ responsibility to confirm whether the transfer had been in line with what he wanted.

When the complaint was referred to a Pensions Omubdsman adjudicator, they ruled that the documents the client sent to Prudential were not clear on what he wanted.

ABI guidance also says Prudential does not have to go back and check which funds the money should be transferred from, and the adjudicator said the provider was correct to disinvest equally because this wasn’t specified.

The complaint was passed to Pensions Ombudsman Anthony Arter, who has upheld the original decision.

Arter says: “While Mr L wrote ‘Prudential Cash’ on the transfer form, the field specifically requested a type of pension scheme, rather than a fund, giving the examples of a stakeholder and FSAVC. I therefore consider that it was reasonable for Prudential to assume that Mr L was referring to the personal pension, rather than a specific fund within the personal pension.

“Prudential has explained that in any case, the transfer form was overridden by [Hargreaves’] online instruction [through Origo]. There is nothing in the online instruction that specifies from which funds the money being transferred should be taken.

“Moreover, I agree with the adjudicator that, where the sending scheme has not specified from which funds the monies should be divested, it is standard practice, and reasonable, to divest equally across the funds, to maintain the same investment allocation and the same level of risk.”

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Comments

There are 4 comments at the moment, we would lover to hear your opinion too.

  1. Clearly the client need proper advice or even guidance.

  2. What a waste of everyone’s time. One can only imagine the amount of paper generated by a disputed transfer of £15,000. Sign of our times I’m afraid!

  3. DIY financial …….
    Would I try to build my own house …….. not a chance in hell

    HL have made this an art form and now on the rich list …… and what’s more a DIY SIPP … a fool and their money etc etc etc

    Can’t wait for “robo (not) advice”

  4. Julian Stevens 10th May 2017 at 8:05 pm

    For what my opinion may be worth, I would have thought that the words ‘Prudential Cash’ written on the form should at least have prompted somebody to establish just what the client’s requirements were before proceeding further. I would have interpreted them to mean that the client wanted the money to be transferred to be realised from his cash holdings which, as it turns out, is exactly what he did mean.

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