pension cases

The Financial Ombudsman Service handles complaints about the sales and marketing of pension schemes. But a separate organisation – the Pensions Ombudsman – investigates complaints and disputes about the way pension schemes are run.

Some of the pension cases that are referred to us could be covered by the jurisdiction of both the Financial Ombudsman Service and the Pensions Ombudsman. The two organisations operate under different rules and can award different amounts of compensation.

To help determine which organisation should deal with which individual cases, we are due to sign a new Memorandum of Understanding (‘MOU’) with the Pensions Ombudsman.

This MOU will follow on from a similar agreement reached in 1995 between the Personal Investment Authority (PIA) Ombudsman Bureau and the Pensions Ombudsman. The earlier MOU related purely to personal pension arrangements. Its effect was to allow the PIA Ombudsman Bureau to handle all complaints relating to those contracts, irrespective of whether they concerned sales and marketing activities or administration and management.

The new MOU needed, in addition, to reflect the changes made to the subordinate legislation under the 1993 Pensions Act. It also needed to address potential complaints about stakeholder pensions, since unless they are exempt, employers are now required by law to provide access to a stakeholder pension scheme, deducting and paying over contributions through the payroll.

The new MOU applies to complaints about personal pension schemes and to the complaints we currently handle about the small occupational schemes, such as executive pension schemes and small self-administered schemes. It means that pension complaints will now be handled as follows:

Inevitably, there will be some instances where it is unclear at the outset which of the two ombudsman schemes should deal with the complaint. We may, for example, take on a case that, because of complex jurisdiction issues, we may ultimately have to refer on to the Pensions Ombudsman. Similarly, there may be certain unusual complaints that the Pensions Ombudsman begins working on but finds, eventually, that it ought to pass to us.

In such instances, at as early a stage as possible, both organisations will liaise and reach agreement about the handling of the case. This will avoid unnecessary delays and make sure that the customer is not left in any confusion about what is happening.