Royal London Personal Pension Plan · CAS-55550-R6C4

CAS-55550-R6C4

Ombudsman’s Determination Applicant Mr R

Scheme Royal London Personal Pension Plan (the Plan)

Respondent Royal London (RL)

Outcome

Complaint summary

Background information, including submissions from the parties and timeline of events parties

On 21 February 2020, Mr R telephoned RL to discuss an internal transfer of funds from Account 1 to Account 2. This was to be carried out on a non-advised basis.

On 12 March 2020, RL emailed Mr R to acknowledge receipt of his transfer request and confirm that a transfer application pack was to be posted to him. This included an application form that had to be completed by Mr R for RL to process the transfer.

On 14 March 2020, Mr R responded by email to say that he had received the transfer pack and had attached the completed form. He asked whether his monthly contributions, which were going into Account 1, would now go into Account 2. He explained that he had another pension that he wished to transfer in. Lastly, he said he wanted to make a top up contribution before the end of the 2019/20 tax year, so requested the relevant documents in order to proceed.

1 CAS-55550-R6C4 On 30 March 2020, RL sent confirmation to Mr R that it had processed his transfer of £122,340.31, with an effective date of 16 March 2020. It did not provide answers to the other enquiries Mr R had included in his email of 14 March 2020.

On 14 April 2020, Mr R emailed RL to register a complaint. He said that RL’s failure to respond to the queries he raised on 14 March 2020 meant that he missed the opportunity to make a payment into the Plan before the end of the tax year. This had put him at a financial disadvantage. He would not be able to carry forward the higher rate tax relief, because his salary had dropped to a level where this would no longer be possible. He was also unable to access information for Account 1, which he needed in order to complete his tax return; he believed this may have been a compliance breach. He asked what RL would do to compensate him.

Mr R then sent a follow-up email to request a reply to his complaint. He said he received an acknowledgement of his email on 14 April 2020. On 15 April 2020, he was asked to log his complaint via RL’s secure message portal, which he did, but he received no further correspondence thereafter. He considered that RL had failed to follow its complaints procedure.

On 17 June 2020, RL emailed a response to Mr R. It apologised that it did not address the queries in his email of 14 March 2020, and that he had not received some of its correspondence after the initial complaint had been logged.

RL said that it upheld Mr R’s complaint and as a gesture of goodwill, offered £450 in recognition of the inconvenience and disadvantage he had been caused. It acknowledged that he could have benefitted financially, if the contribution he attempted to initiate on 14 March 2020 had been actioned.

On 22 June 2020, Mr R replied to say that he was unhappy with RL’s offer of £450. He felt his previous correspondence had demonstrated his intention to make the contribution and he highlighted that he had made similar contributions of £18,000 in 2016, 2017, and 2019. He said that if he had been able to make his intended contribution, he would have received higher rate tax relief of £3,523.80. He believed he would then have achieved an investment gain on the contribution of approximately 7.5%, which he calculated to be an increase in value of £1,687.

Mr R explained that he was not in a position to use the annual allowance ‘carry forward’ to obtain the higher rate tax relief in the 2020/21 tax year. He said he had not chased his initial enquiry in March 2020, because it was not at the forefront of his mind at the time. This was at the outset of the Covid-19 pandemic, and he was starting a new job, as well as suffering with a trapped nerve in his neck.

2 CAS-55550-R6C4 On 9 July 2020, RL emailed Mr R to say it was looking into the concerns he had raised and would respond as soon as possible.

On 19 July 2020, Mr R made a one-off payment to reduce the outstanding balance on his joint mortgage.

On 21 July 2020, Mr R emailed RL to say that he had not heard anything about his complaint since 9 July 2020. He requested it be escalated to senior management.

On 23 July 2020, RL replied to say that Mr R’s complaint had already been escalated to senior management and it would contact him in the near future.

On 27 July 2020, RL issued its response to Mr R’s complaint (the Complaint Response). It apologised for the way it had handled the complaint and increased its offer for the trouble and upset caused to £750.

The Complaint Response attached the information that RL’s Transfer Team should have provided to Mr R as part of a response to his enquiry of 14 March 2020. RL explained its assumption was that if his transfer request had been handled appropriately, its Transfer Team would have sent this to him on 2 April 2020. It said that if he still wished to carry out the pension transfer, he should complete the attached form. It would then consider whether there had been an investment loss as a result of the delay.

The Complaint Response noted that Mr R had been paying net contributions of £32 per month into Account 1. RL provided the form for Mr R to complete if he wished to begin making regular payments into Account 2, and again committed to looking at any investment loss caused by the delay.

On 29 July 2020, Mr R replied to RL to set out that he did not consider the offer of £750 was adequate redress. He felt it was unreasonable that RL wanted him to make the contribution before it would consider any investment loss he might have suffered.

Mr R explained that he had attempted to mitigate his loss. His financial advisor had recommended that as he and his wife were looking to re-mortgage, they could take the opportunity to reduce their mortgage balance. He said this had proved to be a favourable decision and it meant that the money for the contribution of £18,000 was no longer available. He asked RL to reconsider its offer.

3 CAS-55550-R6C4 On 4 August 2020, RL responded to Mr R. It noted that his reason for not chasing up his enquiry of 14 March 2020 was due to the Covid-19 pandemic and other challenges he faced. However, it accepted that it had not provided a substantive response to the issues he had raised until 27 July 2020. It said its proposal of redress for the potential investment loss was contingent on the contribution being made. In the absence of this contribution, it could not calculate the investment loss or the tax implications. It also reaffirmed its offer of £750 in recognition of the distress and inconvenience that Mr R had suffered.

Mr R’s position

The mistakes made by RL led him to a decision to reduce his mortgage that he may not otherwise have taken. His financial circumstances changed significantly because of the Covid-19 pandemic, but he did take action to mitigate his loss. He then closed Account 1 and Account 2 in January 2021 and transferred to another pension provider.

If his intended contribution had been made in March 2020, he would have received tax relief of £3,523.80. He would then have benefitted from an approximate 7.5% market gain on top of this, which he calculated to be worth £1,687.

In future it may be possible for him to carry forward unused annual allowance from previous tax years. As such, he is not asking RL to redress lost tax relief that he may recover at a later date but is requesting redress for his investment loss of £1,687.

RL’s position

It accepts that it failed to respond to the queries in Mr R’s email of 14 March 2020 until it issued the Complaint Response.

Adjudicator’s Opinion

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Mr R did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr R has provided further comments which do not change the outcome. I agree with the Adjudicator’s Opinion. Mr R’s additional comments are summarised below:-

• It has been acknowledged that he could have benefitted financially, if his contribution was made as intended, so RL’s error has caused him a financial loss. The initial days of the Covid-19 pandemic in March 2020 created the ‘perfect storm’ to invest. If his contribution of £18,000 was invested in late March 2020, he would have benefitted from a market increase of approximately 7.5%, which he calculated to be a gain of £1,687.

• RL has assumed that he was subsequently unable to make the contribution of £18,000, but he did contribute £9,500 to a pension he holds with a different provider.

• There has been a misunderstanding of his mortgage decision. He did not make a mortgage payment; he had a mortgage that was expiring and was able to secure a new deal with TSB. He had a tight deadline to make this decision, so did not have time to wait for RL’s correspondence.

• The fact that he has closed his account is the reason why RL did not agree to redress his investment loss without the contribution being made. He was unhappy with RL’s administrative errors and closed his account as a last straw. It is unacceptable that RL only offered to provide redress if he kept an account open, meaning he would need to have remained with RL to receive redress.

• He would consider re-opening an account with RL in order to facilitate a redress payment, providing the figure was given to him before the account was opened.

5 CAS-55550-R6C4 Ombudsman’s decision

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I do not uphold Mr R’s complaint.

Anthony Arter

Pensions Ombudsman 5 January 2023

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