TPO sets out its position on trustees’ obligations when considering a member’s request to exercise a pre-2021 statutory transfer right from an occupational pension scheme.

The Pensions Ombudsman (TPO) has published a Determination concerning a pension scheme member (Mr D) who transferred from the British Steel Pension Scheme (the Scheme) to a small self-administered pension scheme in 2014. Mr D complained, some years later, that although this was in accordance with his wishes at the time, the transferring trustee (the Trustee) failed to carry out sufficient due diligence to check for scam warning signs, and then communicate the presence of those warning signs to him.  As a result, Mr D claimed he had lost valuable retirement benefits.

The complaint was not upheld. The Pensions Ombudsman found that when a member was exercising a statutory transfer right in respect of an occupational scheme there was no legislative or regulatory obligation on the Trustee of the Scheme to undertake due diligence, beyond that required to meet the legislative criteria for a transfer, either generally or more specifically as set out in the Pensions Regulator’s 2013 Action Pack “Pensions liberation fraud: The predators stalking pension transfers.” (the Action Pack) or in the ‘Scorpion Leaflet’ aimed at members.

It was common ground that Mr D made a statutory transfer request, for the purpose of the Pensions Schemes Act 1993 (PSA 93), between two occupational pension schemes and that the transfer was paid on 1 September 2014. The legal question for the Pensions Ombudsman was what was the Trustee’s duty of care at that time to Mr D, for example in respect of due diligence, when making the statutory transfer from the occupational pension scheme? 

This case explores the statutory transfer requirements of the PSA 93, at the time of the transfer, and looks at whether it was mandatory for the Trustee to comply with the due diligence checklist set out in the Action Pack or the Scorpion Leaflet. In reaching his decision, the Pensions Ombudsman looked at the following:

• The Trustee’s obligations to meet the express transfer provisions of the PSA 93.
• Statutory due diligence requirements.
• Regulatory due diligence obligations.
• The Common Law duty of care in negligence – i.e. whether there was a duty of care to go beyond the legislative requirements and nonetheless carry out the due diligence suggested by the Action Pack.
• Equitable duties of care.

These areas of law were examined in detail and the Pensions Ombudsman found that there was no general, common law or equitable duty of care that required the Trustee to conduct the due diligence suggested by Mr D and his representative. The Pensions Ombudsman further observed that the Trustee had not voluntarily assumed a responsibility to investigate the receiving scheme (for example, as set out in the Action Pack) and had not made any promise or implied representation to Mr D that it was conducting due diligence which he could argue that he then relied upon to his detriment.  

This Determination provides an important, legal assessment of a trustee’s duty of care when considering a statutory transfer request from an occupational pension scheme, for the period from February 2013 until the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 came into force on the 30 November 2021. Although each case turns on its own facts, it is likely to inform TPO’s approach to similar cases.

Further Determinations setting out TPO’s view of the position in respect of transfers made from personal pension schemes (which are subject to the FCA perimeter, different regulatory burdens and can also come under the jurisdiction of FOS as well as TPO) or where a discretionary/non-statutory transfer is being considered will follow in due course.

The full Determination is available on The Pensions Ombudsman website.