Scottish Widows Limited · DRN-6177900

The complaint Mr M complains about the service received from Scottish Widows Limited (Scottish Widows). His complaint includes having received incorrect quotes, not being aware of a “Special Final Premium”, incorrect contact details being provided, issues with the way his complaint was handled, and a lack of flexibility relating to when he could take the Guaranteed Annuity (GAR) available under his policy. I note that Mr M has other complaints with this service, which have been dealt with individually. What happened Mr M held a personal pension with Scottish Widows with a normal retirement date set at his 60th birthday in September 2025. In March 2025, as Mr M’s retirement was six months away, Scottish Widows sent him a set of documents explaining his retirement options, the GAR and references to the final premium which would cover the time between Mr M’s retirement date and the anniversary of the plan. It also outlined a number of considerations for Mr M to think about. In July 2025, Scottish Widows issued a further retirement pack. At that time, his pension was valued at approximately £136,594. The pack again outlined the options available to Mr M, and the special features applying as well as clearly explaining how Mr M could ensure that he would get his GAR. Following a call from Mr M to Scottish Widows in July 2025, a series of annuity quotes were issued to him at his request. On 2 September 2025, Mr M complained to Scottish Widows. His complaint included a number of points as set above, which related predominantly to the poor customer service received, as well as a concern about the lack of flexibility in relation to his GAR and the special final premium, which he requested be waived due to the short time he had been aware of it. He requested that the correct quotes were issued to him and clear information was provided. On 21 October 2025 Scottish Widows sent the requested annuity quotations along with the relevant forms and a comparison quote. The covering letter explained that the quotation didn’t take into account health or lifestyle factors which could have an impact on the level of income available in retirement. On 22 October 2025, Scottish Widows sent their final response to Mr M. They upheld his complaint, and by way of apology, sent him £500. They accepted that their service had fallen short of the level that would be expected, in respect of the quotes being issued, lack of reminders in relation to the Special Final Premium (SFP), complaint handing failings and incorrect details being issued. In respect of the flexibility around the GAR, Scottish Widows confirmed that this was only available for a limited time after Mr M’s 60th birthday.

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On 13 February 2026, our investigator issued his view. Having carried out an investigation, he concluded that Scottish Widows had failed in their duties to issue correct quotes that were clear and accurate, and agreed with the failings that had been accepted by Scottish Widows. In respect of the SFP, the investigator agreed that although information had been sent in the original paperwork, Scottish Widows should have sent reminders at set points which they had failed to do. Scottish Widows had also upheld this part of the complaint, and the investigator agreed with this. The investigator also agreed with Scottish Widows that they had failed to return calls as promised, although did not comment on the complaint handling aspect as this does not fall within the remit of this service. Turning to the GAR, because the policy did not offer any flexibility, the investigator concluded that Scottish Widows had not made an error in respect of this. He agreed that the award of £500 offered by Scottish Widows was reasonable, and in line with what our service would have recommended. Because the offer falls within the amount he would have recommended for a situation involving significant inconvenience, worry and disruption he believed the award amounted was fair. Mr M did not accept the investigator’s view, instead requesting that Scottish Widows pay the amount of the SFP to him, or pay the increased annuity. Because Mr M did not accept the investigator’s view, the complaint has been forwarded to me to make a decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I am in agreement with the investigator, and for broadly the same reasons. I have summarised this complaint in less detail than Mr M has done and I’ve done so using my own words. My decision does not address every point raised by the parties. This does not mean I have ignored them; rather, I am only required to comment on what is necessary to reach a fair outcome. No discourtesy is intended by this; our rules allow me to do this and it simply reflects the informal nature of our service as a free alternative to the courts. I have read Mr M’s correspondence to this service, and listened to the call recordings. It is clear to me that whilst Mr M is extremely dissatisfied with the customer service he has received from Scottish Widows, the main element of his complaint is that relating to the SFP. Because Scottish Widows have acknowledged the poor customer service and compensated Mr M for this, I have therefore not considered further Mr M’s points relating to the incorrect quotes and poor communication, except to uphold this element and to take them into account when considering fair compensation. I have focused primarily on Mr M’s key complaint point, that is, Scottish Widow’s failure to notify him of the SFP that he could pay at his normal retirement date in order to receive a higher annuity payment in retirement. Mr M states that this failure to notify him has had a material impact on him financially, and he is worse off as a result. Having considered the evidence, I am unable to agree that the lack of notification of the SFP five years prior to his normal retirement date has had a material impact on his financial position in retirement.

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At the outset I think it is useful to reflect on the role of this service. This service isn’t intended to regulate or punish businesses for their conduct – that is the role of the Financial Conduct Authority. Instead this service looks to resolve individual complaints between a consumer and a business. Should we decide that something has gone wrong we would ask the business to put things right by placing the consumer, as far as is possible, in the position they would have been if the problem hadn’t occurred. When he reached his normal retirement date, Mr M made a decision whether it would be beneficial to him to pay the £1,011 SFP in order to receive an increase to his pension of around £85 per year. Having completed his own calculations, Mr M decided that due to the amount of time it would take for him to recoup the initial £1,011, it would not be financially beneficial for him to pay this in order to receive a small uplift to his pension. He proceeded to go ahead with the lower annuity available. Mr M confirmed during his discussions with our investigator that if the increase to the annuity was higher (if the SFP was paid), he would have made the decision to pay the SFP in exchange for an increased pension. I am therefore persuaded that although the failure by Scottish Widows to notify him of the SFP five years ago has caused inconvenience and stress to Mr M, it has not had a direct impact on him making the decision to pay the SFP at his retirement date in exchange for the enhanced pension. Mr M states that had he known about the SFP five years ago, he would have made small monthly savings to build the lump sum to pay the SFP. Based on Mr M’s statements, I have come to the conclusion that even if he had made these regular savings and reached NRA with a designated pot of money to pay the SFP, he would still have made the same calculation weighing up the SFP against the small increase, and made the decision that it would not be to his advantage to pay the SFP. Mr M has stated a number of times that he is of the understanding that this service seeks to put an individual back in the position they would have been had the error not been made. Mr M is correct in his understanding. I have therefore considered the position that Mr M would have been in were it not for Scottish Widows error. As stated above, I do not think that his decision at retirement would have been different. The original policy documentation issued to Mr M at the outset of the policy included reference to the SFP, and although Scottish Widows did not send out a reminder five years prior to retirement, he was made aware of this in the retirement packs in March and July 2025. I understand Mr M’s comments, where he says that he would have saved money to build a lump sum that would have been available to him now, however he would not then have had the use of the monies that he has had over the last five years. However, as noted above, I do not consider that an earlier reminder about the SFP would have made any difference to Mr M’s decision, which he based on whether the SFP offered good financial value. It is for this reason that whilst I agree that Scottish Widows have failed in their duty to send out a reminder of the SFP five years prior to retirement, I do not think it is reasonable for them to cover the cost of the SFP. Mr M has repeatedly reiterated his views that many people are not in a position to find over £1,000 in the months prior to their retirement. Whilst I understand Mr M’s concerns and understand that Mr M will be disappointed with this outcome, I am unable to comment on the wider impact of the existence of the SFP, or any related issues. This service looks to resolve individual complaints therefore I cannot comment on whether any issues experienced by Mr M may have affected other customers.

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Likewise, Mr M has asked for this service to fine or penalise Scottish Widows in some way, or to request that they update or amend their processes. As explained above, this is not within the remit of this service, which is intended as an informal resolution service to resolve individual disputes. I understand that Mr M wishes us to take steps to penalise Scottish Widows for the issues experienced, however as the Financial Ombudsman Service is not the regulator of the financial services industry, this is outside of our remit. Likewise, we cannot tell a business what services they must provide or how they should provide them. Because of this, although I uphold Mr M’s complaint, I cannot tell Scottish Widows to take any further action in respect of improvements to their customer service. Mr M complains of a lack of flexibility in terms of when he could access the GAR available under his policy. Having reviewed the documentation issued by Scottish Widows, there is no scope for ambiguity that the GAR would only be payable at the selected pension date and I therefore do not uphold this element of Mr M’s complaint. I am also aware that when Mr M took the policy out, he was provided with a copy of the terms and conditions of the plan which included when and how the GAR would become payable. So, had Mr M not been content with how the GAR worked, he would’ve been placed in an informed position to enable him to shop around for a different provider. Scottish Widows have already paid £500 to Mr M by way of apology for the poor customer service received. I have considered whether this is reasonable and am satisfied that it is in line with what this service would have awarded for someone experiencing the issues that Mr M has done. An award of between £300 and £750 is generally considered fair when the impact of a business’s error has caused considerable distress, upset and worry – and/or significant inconvenience and disruption that needs a lot of extra effort to sort out. Mr M’s experience has clearly caused significant inconvenience, therefore I am satisfied that £500 adequately compensates Mr M for the distress and inconvenience caused. I will therefore not be asking Scottish Widows to do anything further. My final decision For the reasons stated above I uphold Mr M’s complaint against Scottish Widows Limited,. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 22 April 2026. Joanne Molloy Ombudsman

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