Not upheld: service failure - erroneous cancellation of direct debit instruction complaint against Scottish Widows Limited
Financial Ombudsman decision DRN-6407126 of 2026-06-10T00:00:00+00:00. service failure - erroneous cancellation of direct debit instruction complaint against Scottish Widows Limited. Outcome: Not upheld.
Decision detail
| Reference | DRN-6407126 |
|---|---|
| Decision date | 2026-06-10T00:00:00+00:00 |
| Firm | Scottish Widows Limited |
| Product | Pension |
| Claim type | service failure - erroneous cancellation of direct debit instruction |
| Outcome | Not upheld |
| Remedy | Scottish Widows Limited must: (1) conduct a loss assessment by redirecting Mr M's ad hoc contributions to cover the £1,600 in missed monthly direct debit payments, backdating them to the original missed payment dates with appropriate tax relief and investment growth applied; (2) provide clear and simple calculations to Mr M showing the outcome of the rewritten contributions and any financial loss; (3) pay £250 for distress and inconvenience. |
Summary
Mr M complained to the Financial Ombudsman Service about Scottish Widows Limited cancelling his pension direct debit instruction in error when he deferred his retirement age in September 2025, despite explicitly stating he wanted to continue contributions. The cancellation resulted in £1,600 in missed monthly payments over 8 months, though Mr M made ad hoc contributions totalling £3,000 during this period. Mr M sought £400 in missed tax relief plus investment growth on £2,000. The ombudsman upheld Scottish Widows' approach: redirecting Mr M's ad hoc contributions to cover the missed payments with backdated tax relief and investment growth applied, plus £250 compensation for distress and inconvenience, rather than awarding tax relief on contributions not actually paid.
The Ombudsman's reasoning
The ombudsman applied the principle of putting the consumer in the position they would have been in had the mistake not occurred. While acknowledging Scottish Widows' error, the ombudsman determined it would not be fair to award tax relief and investment growth on contributions that were not actually paid. However, the ombudsman found it fair and reasonable for Scottish Widows to redirect Mr M's ad hoc contributions (totalling £3,000) to cover the missed monthly payments, with those contributions backdated to the original payment dates and adjusted for tax relief and investment growth. This approach allows a loss assessment to determine if Mr M suffered actual financial loss. The £250 compensation for distress and inconvenience was deemed appropriate for a single mistake with prompt correction once identified.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Scottish Widows Limited, all decisions | 827 | 20% |
| Pension, all decisions | 15,409 | 47% |
Source
Read the original decision on the Financial Ombudsman Service website