How a policeman may have changed pensions for good!

northumbria police

Mr N has just been awarded reinstatement to the Police Pension Scheme at a cost of £135,000. It’s a done deal, the cost is to the Northumbria Police , to the tax-payer – and may be partially offset by the remainder of any money he transferred out (via a CETV) in 2013 into a scheme that’s since failed.

Mr N is a policeman, I am not using his real name so as not to prejudice impending criminal proceedings that are being taken against those who engineered the sorry transfer.

You can read the history of this case in the “decision” of the Pensions Ombudsman (PO-12763) published here. It was published on Tuesday, the day that Mr N found himself back in the pension scheme he left 4 years before.

The story’s made BBC news – but it’s implications have yet to be understood in the pension world. When they are, Mr N may become as important as ” Mr Barber”.

Why this is so important

There are thousands of similar complaints to that of Mr N.  They follow the same path.

  • Financially vulnerable person approached by lead generator for “pension review”.
  • Qualified lead passed to financial adviser with a Pension Transfer Specialist
  • Vulnerable person sold an attractive investment option (without any real idea what he/she is buying
  • Trustees sign-off transfer on basis that a Pension Transfer Specialist is in place
  • Scheme goes tits up
  • Vulnerable member suffers agonies of remorse when he/she realises what’s happened.

But Mr N’s story is different, because Mr N was very brave and very determined and he beat the system that was set against him. Mr N hired help and with that help he won back his pension rights to the Police Pension Scheme. Mr N is now facing a legal bill of £25,000 because he didn’t get costs.

Why Mr N is a hero

I don’t use the word “hero” lightly, I used it in my conversation with Mr N yesterday and I want to explain why I admire him here.

The system likes to quote phrases like “caveat emptor” at people like Mr N. “It was his own stupid fault”. Mr N heard a lot of comments like this. Like one of the steel men  we heard from at Port Talbot, this made him very sad, depressed and it damaged his self-worth.

In the four years, Mr N has suffered anxiety and  depression and the impact of the scam on him and his family was nearly disastrous.

But Mr N pulled through. He instructed his own lawyer and (despite incurring £25k of legal fees which he is liable for), he took his case to pensions ombudsman. The tale he has to tell of the support (or lack of it), he had along the way from the people he put his trust in (his pension adminisrator, his independent financial adviser and the pension fund he transferred into), is barely credible. All were intent on labelling him the architect of his own demise. If you don’t believe me – read Anthony Arter’s “decision”.

Even when the Pensions Ombudsman made his preliminary decision earlier this year, this pressure did not relent. As Mr N told me from his come in north Newcastle yesterday, it was only on Tuesday evening that he could relax with his wife and drink a glass of wine in celebration.

He still has the £25,000 bill to pay.

Mr N is a hero because he fought a system that was shamefully set against him and he won.

He was not entirely alone, Angie Brooks helped him, if you want to read the full story- follow the link. She admits that she couldn’t help him much but she helped him find the right lawyer and made sure Mr N knew he was not alone. Mr N was also supported by Jon Douglas, a journalist who lives near Mr N and has produced a news article for the BBC’s You and Yours program, you can listen to the episode here, the pensions article is at 26 minutes 30 seconds.

Mr N was listened to by the Pensions Ombudsman- Anthony Arter – who took the time and trouble to understand – produce a decision and stand up for Mr N. I am very proud we live in a country where people like Mr N can get such justice, Mr N has not just got Mr Arter (pictured above) to thank, he has the Pensions Ombudsman’s office.

What the judgement means

Each case taken to the Pensions Ombudsman  is dealt with on its merits and we should be careful not to suggest that this case is a PPI style bonanza for anyone who has lost money through a pensions transfer.

But this judgment means that there is now an avenue for redress, for people who since the rules changed in 2013, have been clearly scammed.

The judgement gives those who feel that those who administered their occupational pension scheme did not conduct “due diligence” on where the money being transferred went, can be held liable – if it went to a scheme which was clearly a scam. In the Pensions Ombudsman’s view, Mr N’s scheme  was clearly a scam.

Of course the Northumbria Police  are able to have first call on any money left in London Quantum – hypothecated for Mr N, but as he wrote  in a mail earlier in the year,

I’m sure (the trustees) are trying to succeed and do a good job but due to red tape etc just spend spend spend without result

There is unlikely to be much for the Trustees to recover from the scheme Mr N transferred to, despite there being a bull market since 2014.

The net result of the judgment is that the Northumbria Police will have to fund the cost of reinstating Mr N themselves (as well as paying Mr N a small amount of damages).

The wider impact on pension schemes

If you are the trustee or sponsor or administrator of an occupational pension scheme, whether DB and DC – you should shudder.

The Pensions Ombudsman’s judgement is explicit

Having considered all the available evidence, I am satisfied, on the balance of probabilities, that but for the Authority’s maladministration Mr N would not have proceeded with this transfer and suffered a loss.

To put matters right, the Authority shall reinstate Mr N’s accrued benefits in the Scheme, or provide equivalent benefits, adjusting for any revaluation that has arisen since the transfer


The papers the Authority failed to deliver



The Pensions Ombudsman found against the Northumbria Police  because it failed:

  • to conduct adequate checks and enquiries in relation to Mr N’s new pension scheme; to send Mr N the Pensions Regulator’s transfer fraud warning leaflet; and.

  • to engage directly with Mr N regarding the concerns it should have had with his transfer request, had it properly assessed it.

The impact on Pension Scheme Administration

Most pension administration is outsourced by trustees to professional administrators known as Third Party Administrators (TPAs).

TPAs have generally considered, till now – that they are not liable for the destination of the money, provided they comply with the Law.

1.under section 48(1) of the Pension Schemes Act 2015, scheme trustees must carry out a check on whether members have received appropriate independent advice before permitting a transfer of safeguarded benefits;

2.under sections 98(2) and 99(2A) of the Pension Schemes Act 1993, a member loses the right to a cash equivalent if the scheme trustees carry out this check but the check does not confirm that the member has received appropriate independent advice; and

3.appropriate independent advice is defined in section 48(8) of the Pensions Schemes Act 2015 as “advice that (a) is given by an authorised independent adviser, and (b) meets any other requirements specified in regulations made by the Secretary of State”.

But the Pensions Ombudsman goes well beyond that level of due diligence

96.Turning to the Authority’s comments in respect of being entitled to rely on the relevant statutory discharge, I have found that the Authority failed to carry out reasonable checks before transferring Mr N’s pension and for this reason I do not find that it can rely on section 99(1) Pension Schemes Act 1993. It did not do “what is needed to carry out what the member requires”.

“What is needed” includes appropriate review of the transfer application, taking into account the law and regulatory guidance. “What the member requires” could only be established by ensuring that the appropriate due diligence was carried out, any warnings or concerns identified and brought to the attention of the member, and that the member then went ahead with the transfer, on a fully informed basis.

Although the Authority says it would not have been able to prevent Mr N from transferring out, I have found that Mr N would have acted differently had he received the appropriate warning from the Authority. On the balance of probabilities, I have found that he would have withdrawn his request.

I could summarise this by saying that the Pensions Ombudsman found that the Authority and its administrator’s did not exercise its duty of care to Mr N and is paying a high price for it.

Where does this end?

There is already a long queue at the Pensions Ombudsman’s door, it includes a number of former clients of Active Wealth Management and other firms who advised steelworkers to get out of BSPS. It will now get longer as other former members of occupational pension schemes, seek to get back on board rather than rely on depleted pension funds investing in everything from Cape Verde property to the Strand Capital fund.

Were these claims all to succeed, the liabilities currently expected to fall on FSCS , could fall on trustees – or their TPAs or their TPA’s professional indemnity insurers.

So the Determination will be being read with some interest by all these parties.


Mr N is a hero – but I can see him being cast as a villain

I will say this now, and hope that I am proved wrong. Mr N is likely to be considered not as I have described him, but as a troublemaker who costs shareholders and pension managers and administrators and trustees and sponsors and insurers money.

I expect to see the Pensions Ombudsman’s decision being challenged. It may be that legal arguments will prevent others being restored to their schemes.

Mr N took the pain of the past four years, perhaps advantaged by his being a serving policeman who was familiar with the workings of the courts.

But the strain that doing so put on him and his family was severe and it’s hard to underestimate his bravery. The criminal proceedings are still to come and I don’t want to prejudice them by publicising this Determination in an irresponsible way.

But  I will finish, by commending the Pensions Ombudsman’s Determination to anyone who is interested in justice for those like Sue Flood (a pre 2014 victim) whose losses and sufferings are just as great, but who risk being forgotten.

We do a great thing in running pension schemes for people and we should be aware that sharks live in the waters that surround them. £36.8bn was transferred out of our schemes last year and not all of it went to good homes.  This Determination gives those championing the Pensions Regulator’s Statutory Objective “to Protect Members” , will welcome this judgement.

Mr N is a hero!

mr N.png

He is no villain – nor are other pension fraud victims

scamproof scorpion

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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7 Responses to How a policeman may have changed pensions for good!

  1. Dave C says:

    So if everyone is worse off with these transfers is everyone who took one an idiot?
    Why has the wholesale ‘badness’ been allowed to happen?

    If Mr N had done exceptionally well doing this, would he still be moaning for giving it all back and rejoining his old scheme?

    Where does a gamble end and become a liability for society?

    Only when it doesn’t pay out?

    • Stephen says:

      This is actually an unfair comment. When I put money on a horse in the Grand National for example I know its a gamble and the horse may lose. That’s a gamble and when it loses I don’t blame anyone but myself.

      If I get “fraudulent” advice from a person claiming to be an expert that advises an investment is not only safe, but also in my best interest – that is not a gamble. I don’t know it’s a gamble and I rely on the “expert” advice to be sound – like I rely on my doctor’s diagnosis and treatment to be sound. These are not gambles. You accept the advice because you are not the expert and the person giving the advice claims to be an expert.

      This comment is based on the premise Mr. N. was aware the “advice” was “bad” and greedily knew this was a “gamble” and now wants society to pay for his choice of a three legged horse. I do not believe that to be the case with this or any other victim. They are conned. That is very different from taking a conscious decision to gamble. Were it the case he knew it was a gamble, then I would agree it is not for society to pay the price.

      In this case however, the pensions industry was well aware of the rise in scams and aware it needed the experts (ie. TPA’s) to use their expertise to warn and protect their members from the low-life’s wishing to take advantage of them. When the Scorpion Campaign was launched TPA’s and trustees did not stand up and complain about the obligations being asked of them – to protect their members – quite the contrary. It was hailed as a turning point in the fight against pension scams.

      However, reality has shown trustees and TPA’s have systematically ignored their part in the fight against scams and consequently they are now paying the price for that negligence.

      I do not see how the victim can be blamed for the negligence of the professionals charged with protecting his pension. TPA’s are ignoring the Scorpion guidelines – that’s a deliberate choice on their part.

      People are suffering as a result – and not by any informed choice to gamble.

      If TPA’s did their duty then society doesn’t have to pay for anything.

      Don’t blame a victim of a crime for being a victim of a crime. The blame lies with society for not protecting the victim in the first place. Isn’t that what responsible societies are supposed to do anyway?

      • henry tapper says:

        It is what responsible societies do. There are many Mr and Mrs Ns who will be reading this and they won’t be feeling they are living in a decent society if they are being blamed for being ripped off, Having spent some time talking with Mr N – i can say categorically that he was not gaming the system.

  2. You say: ‘Angie Brooks helped him, if you want to read the full story- follow the link. She admits that she couldn’t help him much but she helped him find the right lawyer and made sure Mr N knew he was not alone.’
    Ombudsman says: ‘…it would not be appropriate for me to award Mr N his legal costs, as it was his own decision to instruct lawyers. He could have made his complaint to us without legal representation.’ Oops. £20k success fee wasted?
    Incidentally, this does not sound like a precedent-setting case. Certainly not relevant (selfishly) to my business. How many transfers are to occupational schemes and how many of those apply to single-employer cases like the police?That’s why the Ombudsman saw a failure in duty of care in this case. In any advised DB to DC outside scheme rules there could still be an entitlement to rely on that advice. It would also then have fallen safely into FOS’ remit, presumably.
    Small point I picked up: TPR scam warnings appear to be written for pension release scams. I agree this case has more in common with that but why not extend the warnings to scams that affect personal pension receiving schemes? They are mercifully rarer than release scams but still need more preventative measures.

    • henry tapper says:

      Interesting points Stuart. There’s clearly a case for saying this is a “one off” but there were a large number of occupational schemes being used for transfers four or five years ago (ask Angie). I’m far from clear where the need for due diligence ends. This case involved an IFA (qualified) an HMRC registered pension scheme and the police pension scheme. All this happened under tPR’s nose. The case was appealed and the appeal thrown out. At some point , someone is going to take this judgement seriously!

      • Stephen says:

        Interesting comments. The case for the “one off” needs to be debated vs the general case.

        There are cases of “scams” not involving occupational schemes but QROPS, unregulated IFA’s and UCIS’s which the profession – IFA’s in particular – can generally spot in a heartbeat are scams but TPA’s seem “unable” or “unwilling” to do so and consequently do not look “deeper” and initiate an open dialogue with members and warn of a potential scam – yours truly for example.

        Not the same circumstances as Mr. N’s I agree, but still could be argued the TPA/Trustee could/should have “done more” as the Ombudsman put it, to protect members.

        We will see as complaints get submitted whether a slightly different “case” can/will be upheld in the same way as this “one off”.

  3. Sue Flood says:

    Congratulation to all …Thank you Henry . Many previous warning from OPRA and the Shark Campaign were ignored by ceeding providers we now need justice for all Victims Pre and Post ….

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