Interactive Investor Sipp · CAS-50810-B4J9

CAS-50810-B4J9

Ombudsman’s Determination Applicant Mr A

Scheme Interactive Investor SIPP (the SIPP)

Respondents Interactive Investor Services Limited (IISL)

Outcome

Complaint summary

Background information, including submissions from the parties

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Adjudicator’s Opinion

• There were administrative failings on IISL’s part. IISL received Mr A’s application to transfer on 11 February 2020. It took from 17 February 2020 to 2 March 2020 to log the IT issue it had identified as preventing progress with Mr A’s application. It then took until 10 March 2020 to take the contingent action of sending the paper application to BW by post.

• IISL’s communications throughout Mr A’s dealings with it were poor and, on occasions, inaccurate. It had identified an IT issue with his application on 17 February 2020 but did not tell him about it when he asked for an update on 20 February 2020. It gave Mr A assurances that his application had been forwarded twice to BW and repeated this in its complaint response to him on 31 March 2020, although this was later corrected. Both attempts to forward the application forms

3 CAS-50810-B4J9 to BW had in fact failed. In reality, nothing had been sent to BW until IISL took the remedial action of posting the forms on 10 March 2020.

• IISL could have acted sooner when it discovered the IT issue with Mr A’s application. When its second attempt to send the application had electronically failed, it could at that point have taken the remedial step of sending a paper application by post. Instead, IISL contributed further to the delay, firstly by not logging the fault until 2 March 2020 and then by taking no further action until 10 March 2020.

• These failings amounted to maladministration that had caused Mr A significant distress and inconvenience and IISL’s award of £200 to Mr A was insufficient.

• In relation to Mr A’s complaint about a loss of value from his pension fund over the period when the maladministration occurred, Mr A confirmed he was aware that this would require SJP to disinvest his pension scheme investments prior to transfer. He was aware that he could have instructed SJP to disinvest at a time he felt appropriate, as IISL drew his attention to this on 12 February 2020. Mr A acknowledged this in his telephone conversation with IISL on 13 March 2020 when he confirmed he had decided not to disinvest, based on the time he anticipated it would take for the transfer to be completed.

• Mr A remained responsible for the investment of his pension funds prior to the point where SJP was procedurally required to disinvest to conclude his transfer.

• His arrangement with IISL to arrange the transfer should be viewed as contractual on the basis that IISL had entered into a contract to complete the transfer of his SJP SIPP within three weeks.

• He entered into a contract with IISL on its acceptance of his transfer application form.

• He has suffered financial detriment as a result IISL’s failure in the performance of that contract.

• IISL is attempting to rely upon the fact that he should have sold his investments.

Mr A’s further comments do not change the outcome, I agree with the Adjudicator’s Opinion.

Ombudsman’s decision Mr A complained that IISL had unduly delayed the processing of his transfer application. He said as a result his pension funds lost value and his tax-free cash was less than it should have been.

4 CAS-50810-B4J9 Mr A contended that a time-bound contract was formed when IISL accepted his application to transfer. For Mr A to have entered into the transfer arrangement with IISL on the basis that the three-week timescale was contractually agreed, the terms would have needed to be clearly expressed prior to the submission of his application form.

I note that the transfer application form signed by Mr A includes no reference to any guarantee of a specific timescale and Mr A did not provide evidence of any such guarantee.

On receipt of the application, IISL issued an email of acknowledgement which Mr A received on 11 March 2020, in which it said:

“How long will the transfer take? Transfers can take up to 3 weeks UK stocks can take up to 6 weeks Funds and international stocks can take up to 8 weeks”

I consider the wording of this acknowledgement to represent a guide to the typical timescale rather than certainty or a guarantee that the transfer would be completed in no more than three weeks. In any event, this acknowledgement was received after Mr A’s decision to submit his application form so it could not be considered to be evidence of the terms upon which he believed he had engaged IISL to act.

For a contract to exist, the essential elements of a contract must be found; offer, acceptance, consideration, the intention to create legal relations, and certainty of terms.

I do not agree that IISL made an offer to complete the transfer within 3 weeks. Nor do I agree that there would have been certainty of terms even if the existence of an accepted offer were proven. IISL said a cash-only transfer “Can take up to three weeks.” This is an indication of possible timescale and does not represent certainty of terms.

Even if I agreed, which I do not, that there was both an accepted offer and certainty of terms, I do not agree that there would have been any intention to create legal relations. IISL was one party to the transaction and would not have been in a position to guarantee the performance of external parties to the transfer such as SJP, the investment managers acting for Mr A’s SJP SIPP, or the transfer administration platform Origo. I am not persuaded that IISL would have intended to infer any such guarantee, and none was mentioned in the declaration of the application form that Mr A signed in order to commence the transfer process. I find that the evidence dictates that no such guarantee was given or intended.

Mr A discussed his transfer intention directly with SJP before he completed his IISL transfer application form. When IISL invited Mr A to consider whether he should sell investments under the transferring scheme, he said he had decided not to do so on the basis that his transfer was going to take around 10 to 14 days to complete. 5 CAS-50810-B4J9 IISL was not Mr A’s adviser. He initiated the transfer of his pension and intended to manage the investments in retirement. I do not accept that he would have been ignorant to the risks of investment volatility. He could have taken control of the timing of when investments were sold to mitigate those risks, but instead allowed the timing to be determined by IISL’s process. I find that Mr A made his own, informed decision not to sell his pension investments and understood the volatility risks associated with his decision.

IISL failed to act promptly on the IT issue that was causing the transfer of Mr A’s pension fund to fail. Even when IISL was aware of the issue it failed to keep Mr A informed, causing the need for Mr A to have to repeatedly press for information. These failings were aggravated by IISL’s provision of inaccurate information regarding the status of the transfer and its efforts to put things right. These failings represent maladministration and will have caused Mr A distress and inconvenience. In the circumstances I find that an award of £500 is appropriate to acknowledge the significant distress and inconvenience Mr A has experienced.

I partly uphold Mr A’s complaint.

Directions

Anthony Arter

Pensions Ombudsman 30 September 2022

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