Hogg Robinson Financial Services Ltd v Pensions Ombudsman 1

Reference: (1998) OPLR 131

On being made redundant, the complainant wished to consider his pension position. Under his previous employer's money purchase scheme he had a basic entitlement arising from normal contributions and an AVC entitlement provided through a Royal Life insurance policy. In addition, the complainant made a further contribution out of his redundancy payment. On 5 January 1994, Hogg Robinson, the scheme manager, sent a transfer value quote to the complainant which failed to properly reflect the value of his AVC or redundancy contributions. This transfer value quote was guaranteed for three months. The complainant stated that he was aware that this quote was incorrect. However, the covering letter had stated that Hogg Robinson's transfer bureau would shortly provide a comparison of benefits and the complainant awaited that comparison. Unfortunately this comparison, which was also incorrect, was lost in the post. The complainant contacted Hogg Robinson on 9 March to enquire of this comparison and pointed out that the transfer value quoted was incorrect. The mistake was acknowledged. However, it took a further three weeks before Hogg Robinson provided a corrected transfer value. This was posted just before the Easter bank holiday and was received by the complainant after the end of the three month guarantee period. During this period the value of the pension fund had fallen and the complainant's cash equivalent had accordingly dropped by approximately GBP 45,000.

The complainant, and his IFA, protested about the reduction in the cash equivalent. Hogg Robinson refused to accept responsibility. On complaining to his employer, the secretary to the trustees referred the matter back to Hogg Robinson who stated that they had acted correctly and were not willing to extend the guarantee period. This complaint was not actually considered by the trustees.

The Ombudsman held that Hogg Robinson was guilty of maladministration both in the preparation of the incorrect benefit statements and by refusing to extend the guarantee period. They were ordered to make a payment into the complainant's personal pension equivalent to the fall in his cash equivalent transfer value. The Ombudsman also held that the trustees were guilty of maladministration in that they failed to properly consider the complaint and, in addition, they had not provided adequate guidelines to ensure that Hogg Robinson had fully observed the trustees' primary duties.

Park J upheld the Ombudsman's finding of maladministration against Hogg Robinson but only in relation to the incorrect quotations. The Ombudsman had based his finding in this area on the fact that the transfer value quote did not fully comply with the transfer regulations. The judge held that irrespective of this, there was clearly general maladministration by Hogg Robinson in failing to adequately perform its functions as manager of this scheme. However, the refusal of Hogg Robinson to extend the guarantee period, whilst the effect on the complainant may be austere, did not amount to maladministration. The Ombudsman had no power to question the merits of a decision where maladministration was not present.

Park J also rejected the Ombudsman's finding against the trustees. He held that the mere fact that the scheme manager had taken a decision which is judged after the event to be misguided did not inevitably result in a finding that the trustees had failed to prescribe adequate guidelines for that manager. In addition, the judge did not believe that the complainant could expect the trustees as a body to meet to discuss his individual case.

Having made these findings, the judge then remitted the issue of causation for the Ombudsman to reconsider. The Ombudsman had to decide whether the failure of Hogg Robinson to provide a correct cash equivalent transfer value quote was the cause of the complainant's loss.