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Northumbria Police Authority pension transfer ruled ‘inadequate’

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The Pensions Ombudsman has ruled Northumbria Police Authority’s due diligence ‘inadequate’. This follows a case launched by an officer who had his pension transferred without the Authority conducting adequate checks.

Northumbria Police Authority

The Pension Ombudsman’s decision centres on a complaint by a police officer against the Northumbria Police Authority. The officer claims his pension fund was transferred to a new scheme without adequate checks being conducted. He also claims Northumbria Police Authority failed to provide him with a sufficient warnings about the scheme as required by the Pensions Regulator.

In March 2016, Mr N brought the complaint forward to the scheme. He was concerned that his entire pension fund may have been lost or misappropriated. However, this was not upheld. Mr N then contacted the Pensions Ombudsman who decided that the case warranted an oral hearing.


Mr N was a member of the pension scheme before he stopped paying contributions in 2012. He sought advice on the possibility of transferring to another pension provider who would let him access his pension when he was 55.

In August 2013 he contacted a company called Pension Transfer UK. Shortly after, he received a follow up phone call from Viva Costa International. This was an unregulated introducer which drummed up work for independent financial advisers. He was then referred to Gerard Associates Limited. They recommended he join the London Quantum scheme.

In August 2014, Mr N received confirmation that the transfer payment of £112,077.66 had been made from the scheme to London Quantum. Gerard took a fee of nearly £5,000 out of the transfer payment.

It was not until 2015, that Mr N discovered that he had signed up to a high risk investment. This did not reflect his attitude to risk. The provider knowingly offered Mr N a scheme unsuitable for his needs. This amounts to financial mis-selling.

Since making this transfer, the sole sponsoring employer of London Quantum, Quantum Investment Management Solutions LLP has now gone into liquidation.

The decision

After reviewing the case, the Ombudsman noted that February 2013 marked a point of considerable change in the level of due diligence expected of trustees, managers and administrators when considering pension transfer requests.

As a result, the Ombudsman stated that the Northumbria Police Authority had not exercised the increased levels of due diligence and enquiry now expected of it by the pensions regulator. It was also said that they should have sent an individual warning to scheme members.

The Ombudsman highlighted that given the few transfer enquiries that Northumbria Police Authority received that it would have been appropriate for them to focus on these requests and to ensure that appropriate warnings were given.

It was found that the defendant did not recognise the red flags in Mr N’s pension transfer. As the scheme was sponsored by a dormant company, the Northumbria Police Authority should have made further enquiries. They also did not contact Mr N about how he discovered the scheme and his reasons for transferring.

In conclusion, the Ombudsman stated that the Northumbria Police Authority did not meet their obligations. It said they left Mr N’s pension pot vulnerable. Therefore Northumbria Police Authority had failed Mr N.

The Ombudsman ruled that Northumbria Police Authority should reinstate Mr N’s accrued benefits in the scheme. If this was not possible, it should provide equivalent benefits to what he would have had, had he remained in the scheme.

Mr N was also awarded £1,000 to reflect the materially significant distress and inconvenience he suffered.

What does the decision mean?

Glyn Taylor, solicitor at APJ, said: “We believe the Ombudsman’s ruling is a landmark decision. It now means that potential scam victims may be able to seek and potentially obtain redress if they complain to the Ombudsman. It also puts the spotlight on administrators to ensure that they perform proper and thorough checks before allowing any transfers to take place.”

If you believe that you were mis-sold a financial product following inadequate due diligence by administrators, get in touch. Our team of experts will be on hand to offer support and advice.