Not upheld: irresponsible pension transfer and insufficient due diligence complaint against The Prudential Assurance Company Limited

Decision detail

Summary

Mrs M complained that Prudential failed in their responsibilities when she transferred her personal pension to a SSAS in 2016, which was subsequently invested in a hotel development in Cape Verde that lost all value. Prudential had initially refused the transfer in 2014 citing pension liberation concerns, but allowed it to proceed in 2016 after a 90-day cooling off period, during which they provided multiple warnings about scam risks specific to Mrs M's circumstances, including references to a National Fraud Intelligence Bureau alert about Cape Verde hotel investments. Mrs M had been cold called by an unregulated intermediary, had not received regulated financial advice, and signed a declaration confirming she understood Prudential's concerns. The ombudsman found that Prudential's due diligence and warnings were reasonable and appropriate, and that Mrs M's choice to ignore these warnings meant Prudential should not be held responsible for the investment losses.

The Ombudsman's reasoning

Prudential carried out reasonable due diligence by identifying scam risk indicators specific to Mrs M's circumstances and providing tailored warnings that directly related to her situation (cold call, unregulated parties, high returns, overseas Cape Verde hotel investment, SSAS establishment). The firm's letters were strongly worded, made clear they did not endorse the transfer, provided specific information about pension scams, recommended regulated advice, and enforced a 90-day cooling off period. Mrs M was asked to sign a declaration confirming she understood Prudential's concerns and had read pension scam warnings. The guidance was informational and advisory in nature, allowing firms to take proportionate approaches balancing consumer protection with members' transfer rights. Prudential's actions constituted reasonable intervention, delay and escalation of concerns.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website