Not upheld: alleged mismanagement of pension fund investments and poor fund performance complaint against Scottish Widows Limited trading as Lloyds Bank

Decision detail

Summary

Mr T complained that Scottish Widows mismanaged his two pension policies, resulting in significant falls in fund value before he annuitised them in 2022. He sought compensation for the shortfall, arguing that Scottish Widows should have ensured his funds grew. Scottish Widows rejected the complaint, attributing the falls to market conditions. The ombudsman found no evidence of mismanagement or administrative error, determining that the 2022 market volatility caused by global events (Ukraine war, Covid aftermath, rapid interest rate increases) was beyond the firm's control and could not have been predicted. The ombudsman noted that Mr T had received information about the non-guaranteed nature of the investments and that the firm's role was pension administration, not investment advice. The complaint was not upheld and no compensation was awarded.

The Ombudsman's reasoning

The ombudsman found that while Mr T's disappointment was understandable, compensation can only be awarded if the firm has done something wrong and that failing caused the financial loss. Poor investment performance alone is not evidence of mismanagement. The fund values fell due to unprecedented market conditions in 2022 (including the Ukraine war, Covid aftermath, and rapid interest rate increases) which were beyond Scottish Widows' control and could not have been predicted. The funds were unit-linked with no guarantees, and Mr T had received information about this through annual statements and policy documents. Scottish Widows' role was to administer the pension, not provide investment advice, and investment decisions were Mr T's responsibility. The timing of Mr T's retirement coinciding with difficult market conditions was unfortunate but not the firm's fault.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website