Pension transfer gone wrong - help with complaint needed

ZingyGinger

I have come to the Forum to see if anyone can give some general advice about a pension transfer that has gone wrong and caused me lots of stress and upset from the loss. It has been so worrying that I have not been able to revisit it for months and now we are at the deadline for raising issue with the Financial Ombudsman as it has been 6 months since final letter.

The key parts of the problem are:

- I wanted to do a partial transfer of around £50k from Pension provider A to Pension provider B

- I wanted the £50k to be made up of selling 100% units from Fund X which was around £30k, and the other £20k to be a combination of selling units from 4 other funds in specific proportions of my choice

- I had spoken to both Pension A and B before starting the process to request postal transfer forms and talk through the process, also stating that I wanted to do a partial transfer with my own % allocations. They indicated I should state all this on the transfer form, and nothing would happen until they had received these requests. All of this is captured on their recorded calls.

- Pension B had said I could start the process electronically, but the transfer would not take place until they received my form stating which funds I wanted Pension A to sell

- I started the process electronically at Pension B whilst waiting for the forms to arrive. I had re-confirmed with someone that nothing would actually happen until they received my paper form.

- a week later, I logged into my account at Pension B and saw that it was in credit by £50k!

- it turned out, both providers use an electronic system to communicate and this automated transfer happened without any further instruction from me

- Pension A transferred £50k split equally across all 5 funds

- the reason I wanted to sell out of Fund X was that it had been performing poorly for a while with no prospect of improvement in the short term (and not just because of market factors)

- as a result, I have experienced a significant loss due to the majority of Fund X remaining in the market at Pension B. As this was over 6 months ago, the loss has worsened.

- Both Pension A and B had agreed with the initial complaint and having listened to the various recorded calls, have said I was misinformed

- they have offered minimal compensation for distress (a £100+£200) and offered to put me back to the original position as if the mistake had not happened. The problem is this makes the loss even worse because it means that units were sold from Fund X, the complete opposite to what I wanted

- is anyone able to help with whether I have any other grounds for complaint and what would be reasonable compensation/remedy? Very grateful to hear any thoughts from anyone with knowledge or experience in this area. Sorry for the long post.

greatkingrat

Why didn't you just sell the funds in Fund X the day after the transfer happened if you didn't want to stay in that fund? Nobody forced you to stay in it for six months after the transfer happened.

Tealblue

ZingyGinger said:

I have come to the Forum to see if anyone can give some general advice about a pension transfer that has gone wrong and caused me lots of stress and upset from the loss. It has been so worrying that I have not been able to revisit it for months and now we are at the deadline for raising issue with the Financial Ombudsman as it has been 6 months since final letter.

The key parts of the problem are:

- I wanted to do a partial transfer of around £50k from Pension provider A to Pension provider B

- I wanted the £50k to be made up of selling 100% units from Fund X which was around £30k, and the other £20k to be a combination of selling units from 4 other funds in specific proportions of my choice

- I had spoken to both Pension A and B before starting the process to request postal transfer forms and talk through the process, also stating that I wanted to do a partial transfer with my own % allocations. They indicated I should state all this on the transfer form, and nothing would happen until they had received these requests. All of this is captured on their recorded calls.

- Pension B had said I could start the process electronically, but the transfer would not take place until they received my form stating which funds I wanted Pension A to sell

- I started the process electronically at Pension B whilst waiting for the forms to arrive. I had re-confirmed with someone that nothing would actually happen until they received my paper form.

- a week later, I logged into my account at Pension B and saw that it was in credit by £50k!

- it turned out, both providers use an electronic system to communicate and this automated transfer happened without any further instruction from me

- Pension A transferred £50k split equally across all 5 funds

- the reason I wanted to sell out of Fund X was that it had been performing poorly for a while with no prospect of improvement in the short term (and not just because of market factors)

- as a result, I have experienced a significant loss due to the majority of Fund X remaining in the market at Pension B. As this was over 6 months ago, the loss has worsened.

- Both Pension A and B had agreed with the initial complaint and having listened to the various recorded calls, have said I was misinformed

- they have offered minimal compensation for distress (a £100+£200) and offered to put me back to the original position as if the mistake had not happened. The problem is this makes the loss even worse because it means that units were sold from Fund X, the complete opposite to what I wanted

- is anyone able to help with whether I have any other grounds for complaint and what would be reasonable compensation/remedy? Very grateful to hear any thoughts from anyone with knowledge or experience in this area. Sorry for the long post.

You've certainly weakened your own case by taking no action for such a long time. I also wonder if you've completely misunderstood what remedial action was offered. If they offered to put you in the position you would have been in had the mistake not happened, that could (and should) mean that you were put in the position you would have been in if they had followed your instructions. 

I don't know what sort of bumper payout you are expecting for distress, but the offer seems entirely reasonable, coupled with putting you in the position you would have been in had your instructions been followed. 

clive0510

I am in the process of transferring my various pension schemes all into one pot with one provider. this is to hopefully save money on costs and charges. ie just pay one maintainance charge instead of several. I'm doing it through a ifa. bit too much for me!

Marcon

greatkingrat said:

Why didn't you just sell the funds in Fund X the day after the transfer happened if you didn't want to stay in that fund? Nobody forced you to stay in it for six months after the transfer happened.

Quite. You aren't going to be compensated for your own lack of action. Your stress and upset would have lasted no more than a few days if you'd got on and switched the funds.

Compensation for distress looks perfectly reasonable under the circumstances. If there was a major loss as a result of holding Fund X for an extra week, you could expect that (but only that) to be made good by the pension providers.

Notepad_Phil

I can see that you could reasonably expect to be compensated for a small amount of nuisance money plus any buying/selling costs in moving the funds in the 'error' portfolio across to how you actually wanted them and for any losses due to the movement in prices in the funds between the time of the transfer and the date that you found out the transfer had happened - which seems to be about a week after, but not for the difference in prices over the last 6 months.

squirrelpie

clive0510 said:

I am in the process of transferring my various pension schemes all into one pot with one provider. this is to hopefully save money on costs and charges. ie just pay one maintainance charge instead of several. I'm doing it through a ifa. bit too much for me!

Does this comment have any relevance to the thread? If not, I'd suggest starting your own thread.

ZingyGinger

Grateful for the comments. I wasn't expecting a bumper payout at all, just for the loss not to have happened. It's not extra compensation I want, only the loss to have not happened and that to be 'compensated' for. Not looking for anything else.

Maybe I have misunderstood but I think the remedy offered about putting me back into the position is as if the transfer had not occurred at all rather than enacting my intention that Fund X was sold at 100% units. That's the key issue really.
This remedial action was only offered a couple of months after it happened so by then, the loss of not selling Fund X was worse, not better. i.e. i am better off with them having sold 20% units rather than 0%, but not neither option was my intention where i wanted to sell 100%. But i am confused now as from your comments, perhaps i have got that wrong?
If I had been able to act immediately, then yes, it could have been rectified much more quickly. At the point it was offered to me, I was not able to deal with it. Distress is different for different people. I realise some people will have coped and dealt with it quicker. I have a long term illness and this knocked me for 6 as it has long term implicatuons for my pension for the future and has caused a lot of worry. 

Brynsam

ZingyGinger said:

Grateful for the comments. I wasn't expecting a bumper payout at all, just for the loss not to have happened. It's not extra compensation I want, only the loss to have not happened and that to be 'compensated' for. Not looking for anything else.

Maybe I have misunderstood but I think the remedy offered about putting me back into the position is as if the transfer had not occurred at all rather than enacting my intention that Fund X was sold at 100% units. That's the key issue really.
This remedial action was only offered a couple of months after it happened so by then, the loss of not selling Fund X was worse, not better. i.e. i am better off with them having sold 20% units rather than 0%, but not neither option was my intention where i wanted to sell 100%. But i am confused now as from your comments, perhaps i have got that wrong?
If I had been able to act immediately, then yes, it could have been rectified much more quickly. At the point it was offered to me, I was not able to deal with it. Distress is different for different people. I realise some people will have coped and dealt with it quicker. I have a long term illness and this knocked me for 6 as it has long term implicatuons for my pension for the future and has caused a lot of worry. 

People can only respond on the information included in a post, so it's not unreasonable to have concluded that you were looking for much higher compensation for distress based on your comment 'they have offered minimal compensation for distress (a £100+£200)'. Given you were able to deal with quite complex instructions to the two providers, and checked after a week to see that Pension B was £50K in credit, I think it would be difficult to argue that you could not/should not have been expected to take action at that point to remedy matters, albeit following up with a formal complaint, to ensure your funds were where you wanted them to be. That probably sounds wholly unsympathetic, but it is intended more by way of expectation management than criticism.

You are entitled to be put in the position you would have been in had your instructions been followed correctly and in a timely manner, BUT with the proviso that the 'compensation window' [the time when your pension was invested in Fund X when you'd asked for Fund X to be sold] only stays open for a 'reasonable time'. In your case, that it likely to have been from the time you found out that your instructions had not been correctly implemented to the time you could reasonably have been expected to either give a fund switch/sale instruction yourself to correct the position, or give instructions to your pension provider(s) to do so. Waiting for the outcome of a complaint isn't normally seen as 'reasonable' where someone could have acted much more promptly to mitigate their own potential losses - but without knowing all the facts, it's impossible to be prescriptive on that point.

From what you've said, it sounds as if the pension providers are guilty of maladministration (getting something wrong), rather than a pension transfer going wrong as a result of your receiving poor advice on the merits of actually doing the transfer. The difference is important because there are different Ombudsmen involved. I think this is one for the Pensions Ombudsman, and (in broad terms) you have 3 years from the date the problem occurred to contacting the Pensions Ombudsman. See https://www.pensions-ombudsman.org.uk/can-i-complain for more information/how to complain.

Before going that route, I think you need to sort out what you've actually been offered by way of a solution. The good news is that free, expert help is available from TPAS: https://www.pensionsadvisoryservice.org.uk/contacting-us

I'd send them the text of your two posts on this thread, plus a copy of your 'final letter', and ask them to clarify what exactly you are being offered. They will also be able to confirm whether or not this is potentially a complaint for the Pensions Ombudsman, thereby ensuring that if for any reason it should be the Financial Services Ombudsman you don't miss the deadline.

ZingyGinger

Very grateful Brynsam for your advice. I take your point I was not clear what I meant about compensation, and maybe the better word is remedy.
And I agree I was able to follow the complexity of doing a pension transfer but i have never done one before and why i phoned them both to check through the processes. It's because they gave me what i thought was correct information that I went ahead. My experience in selling or switching funds is limited and I naively thought that the complaint would address all of this so didn't initiate a sale myself because i thought would make it more complicated. But naive and inexperienced in hindsight.
I did not know about the Pensions Ombudsman and that I could make a complaint there so thank you for that information.
Would you know if that can run in parallel to the FOS complaint?
Not because I want double remedy but just wondering if they might take different approaches, and also because the FOS deadline is imminent so would not want to miss that if the Pension Advisory Service don't get back to me quickly.

Brynsam

You can't normally have two different Ombudsmen looking at the same complaint, because it will fall under the remit of one but not the other, albeit there is acknowledged to be a small area of overlap between FOS and PO - this article gives a good summary: https://www.ftadviser.com/pensions/2019/08/27/warning-ombudsman-services-open-to-manipulation/?page=1

I'd give TPAS a ring on Monday to discuss.