Two pension providers who approved transfers worth more than £50,000 to a suspicious pension scheme have been cleared of wrongdoing by the Pensions Ombudsman (PO).
Legal & General (L&G) and Scottish Widows were cleared despite complainant, Joseph Winning, arguing the insurers had failed to make the necessary checks on the receiving vehicle – the Capita Oak Scheme – before allowing his pension pots to be moved.
But PO Tony King ruled that the providers had followed the right procedures for granting the requests, and pointed out that Winning was convinced of the receiving scheme’s legitimacy because it was registered with HM Revenue & Customs (HMRC).
He found no maladministration on the part of the insurers especially as the transfers were made in 2012, before The Pensions Regulator (TPR) issued industry guidance on pension liberation.
BBC Radio 4’s You & Yours programme previously raised concerns surrounding the legitimacy of the Capita Oak Scheme after people revealed they had been cold called or texted about joining the arrangement.
Last December, King ordered the trustees of the scheme to grant a cash equivalent transfer value to a member identified as Mr X who was attempting to leave the plan, but admitted he lacked confidence that the direction would be complied with immediately.
In an interview with Retirement Planner’s sister title Professional Pensions earlier this month, King said he felt sorry for Mr X and that it was an “awful example of how people have been taken advantage of”, but hoped the published decision would act as a caution to the public.
This latest decision explained that Winning had transferred £42,273 from the Scottish Widows personal pension and faced a 5% initial charge of £2,113. The respective figures from the L&G plan were £10,127 and £506.
Although Winning has been unable to locate his pension funds, he was told last October that they had been invested in storage pods with a company called Store First Limited.
King commented: “Mr Winning has transferred away from a reputable established scheme and there is little doubt that it was against his best interests to do so.
“He transferred to the Capita Oak Pension Scheme, which is of a type that is designed to avoid regulatory obligations that would limit scope for abuse and/or bad advice.
“I imagine that he did so in search of high investment returns and possibly with the inducement of a cash sum. I do not know what has happened to the assets he transferred. They may or may not be secure, though he is very rightly concerned that they are not.”
King added that he had great sympathy for Mr Winning, but he did not consider that there was an administrative failure by the providers in complying with his transfer requests.