PENSION DISPUTE WITH CLERICAL MEDICAL (PART OF THE LLOYDS TSB GROUP) AND THE HANDLING OF THE COMPLAINT BY THE FOS AND FCA
In 1993 I transferred my final salary scheme fund to a pension fund with Clerical Medical (CM),
a Lloyds affiliate, under a Section 32 Buyout Plan.
I had been provided with a ‘Product Guide’ by CM with a BSI kitemark on the cover which stated-
‘CLARITY APPROVED BY PLAIN ENGLISH CAMPAIGN’.
The relevant clause in the ‘Product Guide’ stated:-
‘If the transfer payment comes from a scheme which was contracted out of the State Earnings Related Pension Scheme (SERPS)
where a ‘Guaranteed Minimum Pension’ (GMP) was to be provided,
then you will have to invest enough money in the With-Profits Fund for us to provide this guarantee.
However, once you have provided for the GMP,
you can invest the remaining amount in our Account, in the funds of your choice.’
On that basis I signed a Contract which stated:-
‘I request that any amount not required to provide GMP and any other fixed benefits is applied to the investment funds as shown below:-’
Clerical Medical’s acceptance of the fund was under a Section 32 Buyout Plan,
which according to subsequent legal advice I received,
was subject to Government regulations under British law:-
‘I must confirm at the outset that your Clerical Medical pension is not a personal pension, but a Section 32 Buyout Plan.
Although this plan is not a final salary scheme, the pension funds held in this plan are the result of a transfer
from an old occupational scheme as you note in your letter.
A portion of the fund is made up of contacted-out benefits from that employment, known as Guaranteed Minimum Pension or GMP.
As the name implies, GMP guarantees to pay you a certain level of pension income in respect
of the contracted-out portion of your pension funds.’
All very clear, plain, straightforward and simple.
However, when I retired, CM insisted that a further document which had only been available
on an ‘on-request’ basis totally contradicted the issued documents and the contract I signed in good faith,
and maintained that they could use the ‘Investment Funds’ to supplement the payment of the GMP,
resulting in a significant financial loss.
According to the above legal advice the only term at the discretion of CM was to quantify and define that portion of the fund
containing the ‘contracted-out portion’, and on that basis CM had no legal right to use the other portion of the fund to supplement the payment of a GMP;
I understand that non-compliance with Government regulations under British law would be classed as a criminal offence.
The FOS ‘decision’ upheld CM’s view yet, based upon the above legal advice,
the FOS in my opinion appear to be condoning a criminal offence.
According to the FOS:-
‘…our ombudsmen have a statutory duty to reach a decision they consider to be fair and reasonable in all the circumstances of the case.’
The FOS Independent Assessor also stated that:-
‘… whilst Ombudsmen have to take account of the law they are not bound by it.’
In my opinion I find it difficult to believe that ombudsmen have the authority to allow a firm to commit
what appears to be a criminal offence and how such an offence can be considered to be ‘fair and reasonable’!
The actual statement by the former ‘Economic Secretary at HM Treasury’ was:-
‘Accordingly the Ombudsman is not required to follow the approach which a court might take to evidential matters
although he must “take into account the relevant law”.’
If you take the law into account then surely there is only one option – you must abide by it.
The FOS subsequently sought legal advice at the insistence of my former MP
but refused to provide a copy of Counsel’s assessment claiming legal privilege;
I finally acquired a copy after 3 years under threat of the FOI Act.
On receipt of Counsel’s assessment I complained that the FOS had misled and misinformed Counsel
and did not provide him with a copy of the ‘Product Guide’, but the FOS refuse to comment.
The assessment stated that:-
‘Naturally, if my instructing Solicitor has any queries arising out of this Opinion,
seeks advice on any other aspects of Mr …..’s complaints or wishes to discuss the matter,
she should not hesitate to contact me in Chambers , by telephone or email’.
The assessment also stated that:-
The FOS ‘General Counsel’s Department’ were ‘Solicitors for the Intended Claimant’.
Yet I was never consulted, and my requests that a corrected assessment should be obtained
where I am fully represented and allowed to ensure my evidence is taken into consideration have been continually rejected.
The FOS website clearly states that:-
‘As in any organisation, things can sometimes go wrong, if this happens,
we want to know about it, so we can try to put things right.’
Yet when my current MP raised my concerns with the FOS,
the Chief Ombudsman simply refused to provide answers because he maintained that their final decision
‘…marks the end of our complaints handling process’.
My MP stated:-
‘As your Member of Parliament I can ask the regulatory authorities to review how they have handled a case
and reconsider if the correct outcome has been reached.
I am not in a position, nor should I be, to insist or force the authority to come to a different decision’.
Surely an MP has every right to insist that a Government agency responsible to Parliament review their ‘decision’,
particularly if there is evidence that they may be condoning a criminal offence.
The response from the ‘Chair’ of the Public Accounts Committee was that they are ‘precluded from investigating individual cases’
despite the fact that between 2010 and 2012 there were 3,771 complaints against CM related solely to ‘Decumulation, life and pensions’.
Furthermore, when I retired CM refused to allow access to my pension fund unless I signed a disclaimer
absolving CM from all future claims, which also caused both considerable financial loss and significant stress.
I was obviously not prepared to sign a disclaimer under the above conditions as I was still attempting to pursue my complaint via my MP,
the FOS, the FCA and other routes.
The FCA subsequently issued a directive which declared that the contract was unfair and instructed CM to remove the disclaimer clause,
but CM again refused to compensate for the loss of income and unnecessary stress.
The ‘decision’ by the FOS, who must follow FCA regulations, was that it was my fault because it was ‘fair and reasonable’
for a consumer to sign a disclaimer which the FCA had declared was ‘unfair’!
The ludicrous part is that had I previously signed a disclaimer I would have been unable to raise this complaint!
Complaints to the FCA are rejected because they do not consider pre 1995 contracts
even though they inherited the role of earlier regulators, and because it is considered to be an ‘individual’ complaint.
Yet the FCA website showed that between 2010, when CM ceased selling new policies, and 2012 there have been 3,771 complaints
against CM related solely to ‘Decumulation, life and pensions’,
Also, according to the FCA:-
‘The FCA’s Supervisory activity focuses primarily on the manner in which and the extent to which firms it supervises
are acting in accordance with the provisions of the relevant handbook, rather than the application of “British Law”.’
Yet again it would appear that an agency appointed by the British Government does not have to apply British Law!
The usual trite comment is that an individual pensioner can always take legal action against a financial conglomerate although, of course,
they are fully aware of the fact that it is way beyond the means of most pensioners,
and no individual within the Lloyds TSB group will be personally financially liable.
Has anyone else had similar problems as in my opinion the whole episode has been little short of disgraceful.
