View more on these topics

Prudential told to reverse fund switch after complaint

Prudential-Logo-700x450.jpgThe Pensions Ombudsman has upheld a complaint against Prudential, which changed a client’s fund without consent.

In the case, Mrs F complains Prudential incorrectly switched her with-profits holdings into a cash fund when she reached her normal retirement date at 60.

Mrs F’s normal retirement date was 9 November 2015 and throughout the life of the plan, she had chosen to invest 50 per cent of her contributions in the managed portfolio and the remaining 50 per cent of her contributions in the with-profits portfolio.

But on 18 June 2015, Prudential sent Mrs F’s then IFA a letter saying that all of her fund choices would be switched to the cash fund one month before her normal retirement date unless she provided contrary instructions.

After Mrs F’s IFA discovered her portfolio choices had been switched to the cash fund, they wrote to Prudential on 9 August 2016 to complain on her behalf that they had never received its letter dated 18 June 2015.

As a result, Mrs F did not have the opportunity to remain invested in the managed and with-profits funds.

The IFA went on to complain it had encountered a similar problem with Mrs F’s husband’s plan which was identical to Mrs F’s having the same portfolio choices, portfolio split and contribution rate.

On Mr F’s behalf, the IFA instructed Prudential to change his normal retirement date to 65 and make no changes to his portfolio choices yet Prudential still went ahead and switched his whole portfolio to the cash fund.

The IFA noted that, on the basis that it had failed to take action following receipt of Mr F’s instruction, Prudential had agreed to reverse the switch and backdated to his original normal retirement date.

Since Mrs F’s circumstances were similar to her husband, the IFA suggested that Prudential should also reverse the switch in her case; backdate to her normal retirement date of 20 October 2015, as if the switch to cash had not occurred.

An adjudicator ruled in favour of Mrs F and said Prudential should have recognised it should have written to her directly about the switch and it was notable Mr F was allowed to switch back after the initial error had been made.

Prudential did not accept these conclusions and rejected the argument Mrs F’s case was the same as her husband.

It argued there was no evidence Mrs F sought to continue making contributions to change or change her selected normal retirement date.

In upholding the ruling the ombudsman explains it reviewed the terms and conditions of the plan to establish what happens when a member reaches their selected normal retirement date.

According to the terms and conditions a member can remain invested with the profits after fund age 65 if they instruct Prudential to change their selected normal retirement date prior to their original retirement date.

TPO also points Prudential acknowledged it should have contacted Mrs F to tell her the with profits holdings would be switched to a cash fund unless she instructed otherwise.

In upholding the complaint Prudential must accept any instruction from Mrs F to revise her normal retirement date, switch back Mrs F to her original funds, assess whether Mrs F has experienced a financial loss and if so compensate her.

Recommended

Corporate-Portfolio-Briefcase-General-Business-700x450.jpg
8

FCA survives complaint its FOS oversight is failing

The FCA has survived a complaint that it has failed in its duty to oversee the Financial Ombudsman Service. A complainant took their case to the FCA after saying that the regulator had not lived up to its statutory responsibility to make sure that FOS is capable of performing its duties, and has ignored evidence […]

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
4

FCA begins Connaught compensation payments

Up to £66m in compensation over the failure of the Connaught Income Fund is now on its way back to investors, the FCA has said. In November, the FCA released a critical report on Capita Financial Managers Limited, the fund’s authorised corporate director, and agreed the settlement for investors who lost out. However, a number of […]

people

ABI expands non-pensions company membership as Accenture joins

The Association of British Insurers is continuing to bolster its membership outside of traditional life and pensions companies as consultancy Accenture has joined as an associate member of the trade body. While associate membership is not full membership of the ABI, Accenture can now access the ABI’s data bank, events programme and other industry communications. […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment