Failure to provide information – The case study of Ms R
Ms R is a member of a small self-administered pension scheme (the SSAS) with a trustee company (the Trustee) acting as a professional trustee. In December 2014, Ms R transferred the benefits she had in a previous employer’s pension scheme to the SSAS. Ms R took a tax-free cash sum from the transfer amount and invested the remainder in Bitcoins through the Bitcoin Store.
In March 2015, Ms R received a letter from the Trustee and an invoice to show that 113 Bitcoins were to be purchased for a payment of £18,924.11. The invoice said that payment was to be made to Bitcoin Store Inc at Capital Bank in New York.
The Bitcoin Store was part of Bitcoin Store Inc and is the subject of a Securities and Exchange Commission (SEC) and FBI investigation in the USA. The SEC has stated that although Bitcoin Store investors were given material that claimed it was easy to use and a secure way of holding and trading Bitcoins, the Bitcoin Store never had any operations.
Ms R says that the Trustee had failed to confirm the purchase of the Bitcoins or provide any information on the status of her pension since July 2015. Ms R found it difficult to contact the Trustee and it also took some time for us to elicit a response from the Trustee as it was dissolved by compulsory strike off in December 2015.
A response was finally received from a former director of the Trustee (Mr W), who said that the investment in the Bitcoin Store had not been approved by the scheme’s financial adviser, as it was not acceptable under HM Revenue & Custom’s rules and was not approved by the SSAS.
One of our adjudicators was of the opinion that Mr W’s failure to confirm the purchase of the Bitcoins both to Ms R and to us amounted to maladministration. In addition, Mr W’s failure to answer Ms R’s questions regarding the status of her pension since July 2015, and to inform her that the Trustee was winding up, were further acts of maladministration. As these acts had occurred before the Trustee was dissolved the Adjudicator considered that the Trustee’s dissolution did not absolve the Trustee of liability.
The Ombudsman agreed with the Adjudicator. He also said that because the Trustee had been dissolved, any directions he made against it could not have effect unless and until action was taken to restore it. For that reason, to enable Ms R to take such action should she wish to do so, the Ombudsman directed that Mr W should provide Ms R with proof of the investment in the Bitcoin Store or confirm the location and value of Ms R’s original investment and should also pay Ms R £3,000 in recognition of the exceptional distress and inconvenience she had suffered.
Related determinations
Related case studies
Post retirement increases – The case study of Mr P
This complaint concerns the annual increases that have been applied to Mr P’s pension.
Pension liberation transfer - The case study of Mr S
Mr S complained that the Ministry of Defence (MoD) allowed him to transfer from the Armed Forces Pension Scheme (AFPS) to the Capita Oak Pension Scheme (the Receiving Scheme).