Pension schemes should adapt to Ombudsman’s operational changes

The PO has made significant changes to streamline its procedures and cut lengthy waiting times for those using the service. However, the number of new complaints to the ombudsman is up 53% compared to last year, and the PO wants to see schemes trying harder to resolve complaints themselves.

With this in mind, the ombudsman is asking schemes to check their websites and template communications to make sure that they are pointing members to helpful resources at the right time. There is suggested wording for signposting to the PO but schemes should ask members to bring complaints to the scheme or pension provider first, and provide a link to the scheme’s complaints procedure. 

Complaints often arise from a member’s lack of understanding of the complicated rules relating to pensions. It therefore may help diffuse a complaint early on if schemes point members to internal information resources and highlight guidance services such as MoneyHelper.

Expedited decisions

The PO recognises that schemes may not be able to resolve all complaints they receive, even where the outcome seems clear. To address this, the PO is now using an expedited decision-making process for these complaints. This process was launched last autumn, and the ombudsman has now provided an example of a short-form expedited determination to help explain the process.

Under the expedited procedure, the member’s complaint is considered by a caseworker and, if this decision is not accepted by the complainant, the matter is passed to the ombudsman. The ombudsman’s determination is much shorter than usual and does not set out at length the background to the complaint or the details of the investigation and the parties’ submissions. 

Over time it will be helpful to see the types of complaints that are dealt with under the expedited procedure – in future, the PO has said it will publish a periodic summary. This is important because expedited determinations will not usually be published but may contain lessons for schemes looking to resolve disputes promptly. 

Lead cases

The ombudsman has also recently started using ‘lead cases’ where complaints are prompted by an industry-wide issue or a scheme-specific issue affecting multiple members. It will select a representative lead case and set out the PO’s position in a comprehensive determination. This is intended to inform other complaints – both those still being dealt with by the scheme and any which have already reached the ombudsman.

The lead case approach may be used where the material facts of a group of cases are similar, and the ombudsman’s findings and directions can be applied across all linked cases.  The PO asks schemes with an issue affecting multiple members to get in touch at an early stage, so that the ombudsman can explore whether a lead case approach is suitable.

There are important factors to consider here. In particular, whilst a lead case is being investigated there is a possibility other linked complaints fall outside the limits for making a complaint to the ombudsman. This is particularly relevant given the “unprecedented rise in demand for our service” that the PO has identified.

Also, the PO accepts that it will not be possible to use the lead case approach in all circumstances. For example, it may be necessary to look at individual members’ circumstances, such as where a scheme has made a series of overpayments. This might also apply where members claim that they relied on incorrect information provided to them about their pension and suffered financial loss as a result.

Many complaints will still need to be considered on an individual basis by the ombudsman, so it is helpful that the PO is looking to resolve its historic and complex cases more quickly by expanding specialist teams and upskilling adjudicators. At present, the ombudsman is deliberately taking a very short-term focus as it looks to tackle waiting times and a substantial case backlog. This approach way well evolve over the coming months.

A spending review is approaching, and the ombudsman is hoping for a funding settlement that helps it to address rising numbers of complex cases, in particular by recruiting more permanent staff.

The PO has said it wants to take a more proactive approach to identifying upcoming issues that could increase its caseload, and it has already highlighted some areas of concern which schemes should be aware of. The arrival of pensions dashboards, whilst helping to engage more members with pension savings, may also prompt complaints. Restrictions on members’ statutory right to transfer pension rights to another scheme may give rise to complaints, even though these restrictions may reduce transfers to scam vehicles. In addition, as growing numbers of defined benefit schemes look to risk transfer solutions, the buy-in and buy-out process could identify issues that lead to member complaints.