The Pensions Ombudsman has upheld a complaint against Prudential, which changed a client’s fund without consent.
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.