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Government confirms early resolution power for Pensions Ombudsman

Out-Law News | 13 Aug 2019 | 2:31 pm | 2 min. read

The powers of The Pensions Ombudsman (TPO) are to be extended to provide for early resolution of complaints, the UK government has confirmed.

The government will legislate to enable TPO to facilitate the early resolution of complaints through less formal means in due course, according to its response to last year's consultation on the proposals. However, any agreement reached during the process will not itself be of legally binding status, as the government believes this to be "against the spirit of having an informal early resolution service".

TPO will also be given jurisdiction over complaints brought by employers on their own behalf against administrators or providers of group personal pension (GPP) arrangements, the government has confirmed.

Nurse-Marsh Isabel_November 2019

Isabel Nurse-Marsh

Partner, Head of Pensions Litigation

TPO will need to ensure that any concessions made by parties to achieve an early resolution will not be held against them if the complaint is taken forward for formal determination.

The changes were prompted by the integration of the dispute resolution powers of the Pension Advisory Service (TPAS) into TPO on 1 April 2018. New single financial guidance body the Money and Pensions Service (MPAS) took over TPAS' pensions information and guidance functions.

Pensions disputes expert Isabel Nurse-Marsh of Pinsent Masons, the law firm behind Out-Law, said: "When TPO took over the dispute functions of TPAS, the legislation wasn't changed".

"TPAS' dispute role has been to assist members generally with their complaints, including facilitating an early resolution to complaints without recourse either to TPO or a pension scheme's own internal dispute resolution procedure. However, the legislation governing TPO's procedures doesn't properly allow for it to take on that role. We welcome the changes, which will clarify what TPO can do to help with early resolution," she said.

"TPO will need to ensure that any concessions made by parties to achieve an early resolution will not be held against them if the complaint is taken forward for formal determination. It will also need to make sure cases without merit are rejected. False hope could lead to undue pressure on other parties to make pay-outs where complaints have no basis," she said.

TPO deals with complaints brought by pension scheme members about pension administration. It can also consider complaints about the actions and decisions of the Pension Protection Fund, and some decisions made by the Financial Assistance Scheme. Current legislation allows TPO to "investigate" and "determine" complaints and disputes, and provides that its determinations are final and binding.

The government envisages that TPO will use its new early resolution function when dealing with less complex complaints. Parties would, however, continue to be able to opt for a formal determination; whether through the scheme's own internal dispute resolution process (IDRP) or, should this fail, formal investigation and determination by TPO. Early resolution would operate separately from the scheme's IDRP, although the government expects that most cases of early resolution would take place before IDRP was engaged.

Early resolution would be used to give a 'steer' on the matters in dispute; to encourage the parties to reach a settlement; or to assist the complainant with the IDRP process. It would not have formal legal status. The government envisages that any settlement reached by the parties during their discussions would be enforceable through other means, such as court proceedings for a breach of contract. If no settlement is reached, parties would still be able to access TPO's formal investigation and determination functions.

TPO is not currently able to formally close a case which is settled by the parties outside of its formal mechanisms. The government also intends to legislate to give TPO this power.

The majority of the respondents to the government's consultation were supportive of giving employers the ability to bring disputes of law or complaints relating to maladministration of GPPs to TPO on their own behalf. This is consistent with the dispute resolution routes already available to employers that provide occupational pension schemes. The change will mean some overlap between the jurisdictions of TPO and the Financial Ombudsman Service (FOS), which can hear complaints by small employers. However, this will be dealt with through clearer communications and a revised memorandum of understanding between the two ombudsman services.

Consultation respondents also made a number of suggestions aimed at improving customer dealings with the TPO. These will be passed on to the ombudsman, as they do not require any legislative changes.