The Pensions Ombudsman has instructed Suffolk Life to pay £500 in compensation for failing to transfer a member’s benefits into his occupational scheme on time.
In the ruling, a complainant referred to as Mr S says Suffolk Life as Sipp administrator is responsible for a loss of investment growth because of a delayed transfer.
In 2012 Mr S took out a Sipp with European Pensions Management which consisted of three cash holdings.
These included a Sipp bank account with EPM, a fixed-term cash account with Investec and a fixed-term cash account with Close Brothers.
In 2016 an investigation by the FCA concluded EPM could no longer accept new business but could continue to administer the Sipps on its existing systems.
Around June 2016 EPM entered insolvency proceedings and the Sipp business was sold to Suffolk Life as part of this process.
On 10 December 2016 Mr S contacted Suffolk Life and said he wanted to transfer his benefits in the Sipp to his occupational scheme, the Universities Superannuation Scheme, and sent out the transfer forms on the same day.
Around the middle of January 2017 Mr S contacted Suffolk Life and it informed him the funds in the Investec account had not been transferred to the Suffolk Life bank account and the transfer could not proceed until the funds were received.
Mr S complained about the time it was taking to transfer his funds to USS which eventually received them on 14 July 2017.
His funds were valued at roughly £110,000 when received by USS so Mr S complained again to Suffolk Life about the delay. The firm did not uphold it.
The complaint was then passed onto deputy pensions ombudsman Karen Johnston who ruled in favour of Mr S.
Mr S argues Suffolk Life should be liable for investment losses arising from a seven month delay because it did not know where the Investec account was, carried out unnecessary due diligence on the USS and should have reported the delay to The Pensions Regulator after six months.
Suffolk Life says it accepts distress was caused to Mr S but it had to complete due diligence on a receiving scheme before transferring funds to it for the first time.
It also said that it took a long time to ensure the data records from EPM were correct and this made the transfer more complicated.
In her decision Johnston says there were two stages in the transfer process with the first being an internal transfer that consisted in acquiring assets and accounts previously held with EPM and re-registering them with Suffolk Life.
The second part involved the due diligence on the external transfer, which took over four months because Suffolk Life insisted on full documentation including scheme deeds and a “live signature” on a certified copy of a scheme bank account.
Johnston adds she recognises the good intentions behind Suffolk Life’s level of due diligence but finds if it had taken a proportionate approach to this transfer request, it would have concluded the risk of a scam was minimal.
Therefore she concludes Suffolk Life took too long to make the transfer and should give £500 to Mr S to compensate him for poor administration.
A Suffolk Life spokesman says: “While we will comply with the determination and are sorry for any delay and distress caused to our customer, we do not agree with the Ombudsman’s argument.
“We do not believe it is within the remit of the Ombudsman to base a determination on their opinion of what our appropriate level of due diligence should be.
“The Ombudsman suggests an approach to due diligence which is not consistent with our risk appetite and, if adopted, would risk exposing customers to transfers to pension liberation schemes and we’re not willing to accept that.”