Not upheld: Unknown / needs review complaint against Rothesay Life Plc

Decision detail

Summary

Mr J complained that Rothesay Life Plc miscalculated his pension benefits and unfairly sought repayment of overpaid amounts. Rothesay identified an error in September 2024 (five months after payments commenced in April 2024) whereby Mr J had been overpaid £8,247 in tax-free lump sum and £701 in monthly payments, with his ongoing annual pension reduced from £4,645 to £3,408. Rothesay sought total repayment of £8,809.08 and offered £500 compensation. Mr J objected, arguing the error was not his fault and that the compensation was insufficient, particularly given the permanent reduction in his pension income and impact on his retirement plans. The ombudsman did not uphold the complaint, finding that Rothesay appropriately sought recovery of benefits to which Mr J was not entitled and that the £500 compensation adequately reflected the distress and inconvenience caused.

The Ombudsman's reasoning

The ombudsman accepted that Mr J received pension benefits to which he was not entitled due to Rothesay's administrative error. While acknowledging the shock and inconvenience caused to Mr J, the ombudsman concluded that money paid in error must be recovered and that this constitutes a loss of expectation rather than a financial loss. The £500 compensation was deemed appropriate to reflect the considerable shock, worry, and inconvenience caused, particularly given that Rothesay apologised, explained the error, and did not demand immediate repayment. The ombudsman noted that it is not the role of the FOS to punish a business.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website