Upheld: discretionary decision-making on death benefits distribution; procedural failure in beneficiary identification complaint against Scottish Widows Limited trading as Clerical Medical

Decision detail

Summary

Mrs S, administrator of her deceased son Mr S's estate, complained that Scottish Widows intended to pay pension death benefits to Mr S's estranged wife Ms DS, despite Ms DS having signed a Disclaimer of Inheritance and Deed of Variation. Scottish Widows made its decision to pay Ms DS within days of receiving the death certificate without investigating circumstances or contacting other potential beneficiaries including Mr S's mother and possible partner. The ombudsman found Scottish Widows' decision-making process was flawed, premature, and reflected an automatic assumption that the legal spouse should benefit, potentially fettering its discretion. Scottish Widows accepted the provisional decision and reversed it, agreeing to pay the benefits to Mrs S instead. The ombudsman upheld the complaint and awarded £500 compensation for distress and inconvenience caused by poor handling.

The Ombudsman's reasoning

Scottish Widows made a premature decision to pay Ms DS without adequately investigating the circumstances or contacting potential beneficiaries. The decision was made within days of receiving the death certificate with no time for information gathering, reflecting an automatic assumption that the legal spouse should benefit. Although Scottish Widows reconsidered the decision after Mrs S raised concerns, it still failed to make direct enquiries of potential beneficiaries. Where circumstances are not straightforward and opposing interests exist, direct enquiries are necessary to ensure proper and impartial decision-making. The scheme administrator has discretion, but must understand the legal position, consider relevant facts, and avoid fettering discretion through automatic assumptions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website