Old Mutual Charges Refund

monty1080 · 8 November 2018 at 11:05AM

Hi All, first post so be gentle....
I was a policy holder with Skandia Life which became Old Mutual, from 1997-2017. I transferred the policy due to their restrictive and expensive charges, it cost me a packet to transfer but luckily I made the money back in a year due to a much more efficient fund. Last week I received a letter from them offering me a refund on historic account and exit charges. They're offering just over 8000 gbp which is great but I can't help feeling like this is something I need to look into further. After all it's very rare for an entity like Old Mutual to offer this much money out of the blue. I have read that they were investigated by the FCA along with a few other pension companies and no action was taken however they were censured for excessive charging.
My question is whether I should pursue this further to see if I can get any more out of them or just take the cash. I've searched online for anyone in a similar position to me and can't find anything. Any help or advice much appreciated.

dunstonh · 8 November 2018 at 1:09PM

I was a policy holder with Skandia Life which became Old Mutual, from 1997-2017. I transferred the policy due to their restrictive and expensive charges

This is a good example of why things need to be kept under review. Skandia Life were the first pension company to offer external funds on personal pensions. It was also a fairly well priced pension in its era. However, by 2005 ish onwards, it was surpassed by others. Especailly when Skandia bought Selestia and rebranded that as Skandia. We moved a load of the old Skanda Life PPPs onto the Skandia platform. Although some of those old Skandia life pensions actually had good terms that made them quite cheap in the right circumstances. Even today, OMW have some pensions that just cannot be improved upon elsewhere (0.2x% p.a.total charges for example). Anyway, things go out of date and its important to keep them reviewed.

I have read that they were investigated by the FCA along with a few other pension companies and no action was taken however they were censured for excessive charging.

The FCA carries out reviews all the time. There are dozens if not hundreds of companies having an FCA at this very moment. it doesnt mean they are bad. Especially if no action was taken. They did have an issue back in the 90s which came to light in the early 2000s and anyone affected by this was being automatically contacted with a refund of the amounts involved. I would have thought that was finished a long time ago.

What have OMW said the refund is for?

My question is whether I should pursue this further to see if I can get any more out of them or just take the cash.

And what basis do you wish to pursue this? i.e. what evidence do you have that makes you believe this is wrong?

monty1080 · 9 November 2018 at 3:46AM

They have said the refund is due to them capping their 5% encashment fees and changes in legislation in 2009 relating to 'contribution servicing charges'. I'm just slightly suspicious of someone offering me such a chunk of money, just feels like they're butt covering and there might something bigger on the horizon, call me cynical...

sandsy · 9 November 2018 at 9:13AM

They won't have come up with a number out of the blue. There'll be a general methodology for coming up with a fair amount for every policyholder.

If you believe the amount you've been offered isn't fair or correct, you'll need to ask them about how they've come up with the number and either demonstrate why your number is wrong or challenge the thinking behind the methodology they've used to demonstrate why it isn't fair.

But I have no doubt that they will have poured over the the way in which the numbers are calculated to try and ensure they are fair and minimise the risk of a challenge, both from policyholders or the regulator.

monty1080 · 11 November 2018 at 9:19AM

Here's a link to the relevant page on their site. I believe all the calculations are correct and the reasoning behind it is sound, however I wonder why they're doing it.
I can't post the link to their site but it comes under pension refund.

dunstonh · 11 November 2018 at 12:14PM

however I wonder why they're doing it.

Because they are required to.

spakkaman · 16 November 2018 at 11:25AM

The OP describes my position with a similar refund amount.

What irks me is that they say they are doing this following a review as part of 'looking for ways to improve our products for the benefit of our customers'. No hint of having done anything wrong - no hint of an apology. In amongst the FAQs there is an oblique reference to 'certain regulatory changes in 2009'.

I have spoken to them on the phone and asked if they felt that they had charged me in eroor or made a mistake and they said no. This smells like bullsh*t - as I haven't seen too many companies decide to give out lots of money simply for the sake of being ex-customer friendly.

I don't know how the refund was calculated but they say its tax free. The 8% simple interest they offer may well fall short of the returns I have generated inside the SIPP into which I transferred 4 years ago. The interest payment been taxed at basic rate = £500 tax paid - so I don't think the 'compensation' for lost investment returns is good enough.

Equally had they charged me the 'correct' amount (no 'mistake' made).then that money would be sitting in my SIPP having grown substantially - I haven't touched any of the SIPP and which I don't propose to as it sits outside of my estate for inheritance tax purposes. So there is certainly an 'opportunity cost' to what has happened although this is not that easy to define.

I have asked for more information from OM as the vagueness employed in their comms especially relating to why they are doing this doesn't sit well with me. I await some clarification and would be interested if anyone out there has any more light to shed.

I do in fact try not to be cynical curmudgeon and must therefore acknowledge being suddenly +£8k richer than I thought is :j extremely welcome! :j

spakkaman · 16 November 2018 at 11:27AM

The OP describes my position with a similar refund amount.

What irks me is that they say they are doing this following a review as part of 'looking for ways to improve our products for the benefit of our customers'. No hint of having done anything wrong - no hint of an apology. In amongst the FAQs there is an oblique reference to 'certain regulatory changes in 2009'.

I have spoken to them on the phone and asked if they felt that they had charged me in eroor or made a mistake and they said no. This smells like bullsh*t - as I haven't seen too many companies decide to give out lots of money simply for the sake of being ex-customer friendly.

I don't know how the refund was calculated but they say its tax free. The 8% simple interest they offer may well fall short of the returns I have generated inside the SIPP into which I transferred 4 years ago. The interest payment been taxed at basic rate = £500 tax paid - so I don't think the 'compensation' for lost investment returns is good enough.

Equally had they charged me the 'correct' amount and there was no 'mistake' then that money would be sitting in my SIPP which I haven't touched and which I don't propose to touch as it sits outside of my estate for inheritance tax purposes. So there is certainly an opportunity cost although this is hard to define.

I have asked for more information as the vagueness employed in their comms especially relating to why they are doing this doesn't sit well with me. I await some clarification and would be interested if anyone out there has any more light to shed.

I try not to be cynical curmudgeon and must therefore acknowledge being suddenly +£8k richer than I thought is :j extremely welcome! :j

dunstonh · 16 November 2018 at 11:40AM

They are giving you a marketing spin. A lack of apology is not great.

8% simple is only paid when it is a regulatory breach/wrongdoing. That is what the regulator demands in cases like this.

As the redress is being paid directly, you have effectively got the money out of the pension tax free. You also have your £1k savings allowance. If you want it in the pension, you can always pay it in and get tax relief on it.

xylophone · 16 November 2018 at 11:50AM

But I have no doubt that they will have poured over the the way in which the numbers are calculated

Oil on troubled waters?:)

kborom · 27 November 2018 at 8:47PM

I received one as well, but had 2 pensions with them so am going after something back on the other one.

Can't find anything independent on the web about this so assume it's pretty restricted to OMW

Old Mutual Charges Refund

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