Upheld: Other regulated complaint complaint against Nucleus Financial Services Ltd
Financial Ombudsman decision DRN-4141134 of 2023-09-18T00:00:00+00:00. Other regulated complaint complaint against Nucleus Financial Services Ltd. Outcome: Upheld.
Decision detail
| Reference | DRN-4141134 |
|---|---|
| Decision date | 2023-09-18T00:00:00+00:00 |
| Firm | Nucleus Financial Services Ltd |
| Product | Pension |
| Claim type | Other regulated complaint |
| Outcome | Upheld |
| Remedy | Nucleus must calculate the account value as of 15 February 2013 (when the death claim would have been paid if properly handled), add 8% per annum simple interest to that date of settlement, and compare to what was actually received (£123,823.76 paid July 2016 plus 8% interest to settlement date). The difference is the loss. From this loss, Nucleus must deduct £48,889.68 (amount paid by Firm T's PI insurers plus £5,000 excess) plus 8% interest on that amount from 24 July 2019 (date of PI payment) to settlement date. 50% of the net result is payable to Mr W, with the same calculation applying to his brother. Additionally, £200 each is payable to Mr W and his brother for distress and inconvenience. |
Summary
Mr W complained that Nucleus Financial Services Ltd mishandled the administration of his mother's SIPP pension following her death in May 2012. Although Nucleus received written notification of the death in December 2012, it failed to follow its own terms and conditions by not converting assets to cash and continued sending statements to the deceased. The death claim was not submitted until April 2016, four years later, by which time the two-year HMRC window for tax-free payment of death benefits had expired. This resulted in a 45% tax deduction (£97,780) on the £220,823.76 fund value. The ombudsman upheld the complaint, finding Nucleus should have either converted assets to cash (which would have prompted the death claim) or warned of the approaching tax deadline. Redress was calculated to put the complainant in the position he would have been in had the death claim been paid by February 2013, with deductions for payments already received from Firm T's PI insurers.
The Ombudsman's reasoning
Although there was dispute about an initial informal telephone call, the ombudsman found that Nucleus received clear written notification of Mrs W's death in December 2012 when Firm T explicitly stated the death and provided the date. This notification triggered HMRC's two-year window for tax-free payment. Nucleus's own terms and conditions required it to sell non-cash assets and hold proceeds on deposit upon written notification of death. Nucleus failed to do this and continued sending statements to the deceased. Had Nucleus followed its procedures, the assets would have been converted to cash, prompting Firm T to submit the death claim promptly (by February 2013), resulting in tax-free payment. Additionally, Nucleus should have reminded Firm T as the two-year deadline approached. The ombudsman rejected Nucleus's argument that it was not the scheme administrator throughout, noting that the key events occurred when Nucleus was the administrator. The redress aims to put the complainant in the position he would have been in had Nucleus properly handled the death notification.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Nucleus Financial Services Ltd, all decisions | 14 | 21% |
| Other regulated complaint, all decisions | 18,992 | 19% |
| Pension, all decisions | 15,621 | 47% |
Source
Read the original decision on the Financial Ombudsman Service website