Not upheld: unsuitable pension advice and adequacy of pension review remedy complaint against Royal London Mutual Insurance Society, Limited (formerly United Friendly Insurance)

Decision detail

Summary

Mr M complained that Royal London gave him unsuitable advice in 1993 not to join his employer's Final Salary pension scheme and that the subsequent pension review remedy was inadequate. Royal London acknowledged the bad advice in 1996 and participated in the Pension Review process, ultimately paying £9,050 to reinstate Mr M into the AD scheme from July 1993 to December 1996, plus an additional £981.29 for an AVC. In February 2025, Mr M received his pension quotation and, after comparing his benefits with a colleague's, believed the reinstatement had not adequately compensated him for the 40 months he worked without joining the scheme. The ombudsman found that Royal London had acted fairly by paying the amount specified by the scheme administrators and that any errors in the reinstatement calculation or current benefit valuation would be the scheme's responsibility as the expert administrator, not Royal London's. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Royal London's responsibility was to pay the scheme administrators the amount they specified was necessary to reinstate Mr M into the scheme as if he had joined in July 1993. Royal London obtained the reinstatement calculation from the scheme experts, paid the specified amount of £9,050, and the scheme confirmed reinstatement was achieved. The ombudsman reasoned that Royal London was reliant on the scheme administrators as experts to determine the correct reinstatement cost and that any errors in the calculation or current benefit valuation would be the scheme's responsibility, not Royal London's. The ombudsman also noted that Mr M's comparison with a colleague's benefits was not a reliable basis for complaint, as small differences could accumulate over 30 years and there could be unknown differences in their circumstances. The ombudsman concluded that the scheme trustees/administrators, not Royal London or the FOS, are best placed to verify whether the reinstatement was done correctly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website