DRN-5840293

1 DRN-5840293 The complaint Mr M has complained Royal London Mutual Insurance Society, Limited (THE) gave him unsuitable advice to not join his employers pension scheme in 1993. What happened Our investigator set out the background to the complaint as part of giving his view on matters, for ease of reference I have included an anonymised copy of this below. “In November 1991, you opened a Diamond Pension Plan on the advice of a United Friendly Insurance (now Royal London) adviser. The following year, you increased your contributions to this plan and informed United Friendly you had recently changed employers and were for a firm with the initials LED. In July 1993, you changed employment again and were employed as by AD. You remained employed by AD up until 8 April 2004. When you spoke with United Friendly about your change of employment, you were advised not to join the Final Salary pension scheme offered by your new employer and instead continued to contribute to your Diamond Pension Plan. On 24 September 1996, United Friendly wrote to you informing you they were investigating the sale of your Diamond Pension Plan as part of the industry wide review of pensions sold between 29 April 1988 and 30 June 1994. After receiving this letter, you raised a complaint with United Friendly about being advised not to join the AD Final Salary pension scheme. In acknowledging your complaint on 8 October 1996, United Friendly advised you to consider joining the AD Final Salary pension scheme, as you were still eligible, and you decided to join your employer scheme on 1 December 1996. On 12 November 1998, United Friendly wrote to you with the outcome of the pension review in relation to your employment with LED. United Friendly had calculated your Diamond Pension Plan had a shortfall of £202.76 compared to the benefits you would’ve received had you joined their occupational scheme. United Friendly offered a cheque to allow you to augment your Diamond Pension Plan Value. You wrote to accept their offer of compensation on 16 November 1998.

-- 1 of 6 --

2 On 13 August 1999, United Friendly wrote to you requesting information about your employment after LED. You responded to their request and United Friendly wrote to you again on 13 September confirming they would conduct further enquiries into your pension benefits and requested more information about your AD employment, which you provided. On 5 October 1999, United Friendly wrote to you with an offer to reinstate you into the AD scheme from the period 19 July 1993 to 1 December 1996. On 7 October 1999, you wrote to United Friendly to request your reinstatement into the AD scheme. United Friendly issued a cheque for £9,050 to Gissings Limited (the administrators of the AD scheme) and they confirmed you had been reinstated on 25 January 2000. Following a call from you on 1 August 2006, Royal London wrote to you confirming your period of pensionable service had been reinstated from 19 July 1993 to 1 December 1996. In this letter dated 7 August 2006, they also confirmed they were unsure whether the excess funds of £726.11 had been paid to Gissings to purchase additional benefits in your scheme. Royal London established the excess funds had never been sent to Gissings so they forwarded £981.29 (including added interest) to Gissings to be invested in an AVC. In February 2025, you received a quotation from your AD scheme (now SK) which quoted a cash equivalent transfer value of £76,633.78 including an AVC value of £4,945.78. As the AVC was meant to compensate you for the 40 months you worked for AD without joining their occupational scheme, you expected it to make up a much higher proportion of the total pension value. As you worked for AD for a total of 128 months, you believe the AVC value of £4,945.78 has not adequately compensated for your loss.” Our investigator looked into matters but didn’t uphold the complaint. He said the evidence supported that Royal London had carried out the review in line with the guidance and re- instated Mr M into the scheme. Mr M had said his benefits were a lot less than a friend who had very similar circumstances to him but the investigator said there could be any number of reasons for these differences and we can only look at his situation. Mr M remained unhappy and asked for an ombudsman’s decision. He doesn’t believe he has been put back in the position he would have been in as was the intention of the review. He says the difference between his benefits and that of his friend/colleagues is evidence of that. Mr M says the funds paid to AD were inadequate to meet what he had lost out on. Mr M wants Royal London to recalculate the loss based on the actual value of the pension benefits

-- 2 of 6 --

3 he would have accrued had he from July 1993. Mr M believes a significant error has occurred that has meant there is a substantial difference between his benefits and someone of very similar circumstances. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Our jurisdiction to consider this matter Firstly, I should state that I agree with the investigator’s view on our jurisdiction to consider this case. Royal London has argued that Mr M ought to have known his cause for complaint much earlier than he did and has raised his complaint six years after the event and more than three years after he ought to have been aware of his cause for complaint. Mr M’s complaint is that Royal London hasn’t put right the bad advice it gave him in 1993. Since then Mr M has had his pension reviewed and was told he was going to be put back into the position he would have been in. And therefore, putting right the original bad advice. But for Mr M to know then whether this had been done correctly would require knowledge at a level that a layperson just wouldn’t have. Mr M’s cause for complaint that the original advice hasn’t been put right, has came about because as he has reached retirement age, he has received confirmation of the benefits he will receive from the scheme. And I’m assuming because he had concerns then about the amounts quoted, he asked a friend and colleague who he says has the same circumstances, if he could compare and the comparison wasn’t favourable. It was at this point that Mr M had his cause for complaint, that he’d been given bad advice and it hadn’t been put right as he’d previously been told. Merits of the complaint Mr M has set out why he thinks something has gone wrong but some of the points being made seem to be unrelated to what has happened here, such as points about the actuarial assumptions of the Pension Review and the failure to account for future economic conditions and salary progression. I suspect Mr M has used AI to put forward these arguments. This may have been relevant if Mr M had been paid a sum of compensation to add to his plan with Royal London but this is not what happened here. Mr M was re-instated into the scheme as was the preferred option of the regulator as part of the Pension Review. This is at the heart of why I don’t think that Royal London has done anything wrong. And why if there is something wrong with the benefits Mr M has been quoted, I don’t think it is responsible. I’ll

-- 3 of 6 --

4 explain why. The Pension Review was designed to put people back into the position they would have been but for the bad advice. The preferred method was re-instatement into the scheme but many schemes would not allow this. Re-instatement done correctly would put a person back into the scheme as if they’d joined at the agreed date. In this situation there are no assumptions going forward or predictions of salary progression. It should do exactly what Mr M is saying he wants now, with the end result of paying him benefits in line with what he would have received had he always joined the scheme in July 1993. Royal London paid the scheme a sum it was told would allow Mr M to be put back in the scheme as if he’d always been within it. So he would be no different to anyone else who’d joined directly at the time. Mr M believes that it hasn’t been done correctly, largely seemingly because of the comparison with his colleague that Mr M says has very similar circumstances to him. I will say that small differences can add up over time, Mr M says he started at a similar time but not the same, and has said they had the same salary, similar age etc but this was over 30 years ago so there is the potential for differences either forgotten or not known about between him and his colleague. It’s also possible of course that Mr M’s colleagues’ benefits have been calculated incorrectly. It’s important to look at what happened to explain why Royal London isn’t responsible for the value of the benefits now; The AD scheme eventually agreed that Mr M could be re-instated into the scheme. It said it would do so if there was no cost to the scheme and said Royal London would need to pay it to do the reinstatement calculation. Royal London asked the scheme to confirm its policy regarding re-instatements of missed service and the payment of excess personal pension funds into an AVC fund. Royal London paid the fee for the calculation and the administrators of the scheme told Royal London the cost was £9,050.00 to reinstate Mr M into the scheme. Royal London paid this amount to the administrators to complete the re-instatement. It also told the administrators that Mr M had a surplus fund of £726,11 which it said should be used either to buy additional service or to be placed in an AVC arrangement. It asked the scheme to advise which options were available. The response from the administrators of the scheme was that it would confirm who the cheque should be payable to soon. So the key point here is that Royal London was reliant on the scheme to tell it how much was needed to put Mr M back into the correct position in the scheme. And they were told by

-- 4 of 6 --

5 the scheme how much it would cost; they paid that amount and the scheme confirmed that the reinstatement had been achieved. That is all Royal London could reasonably do they had discharged their responsibility for the bad advice; they were reliant on the scheme for information about how to put things right. Within this context, if there was a mistake with the re-instatement value, this mistake could only lie with the scheme and not Royal London. There is also the question of the surplus funds and how they should be treated within the scheme. Royal London asked on two occasions for advice about how the scheme would deal with this and I cannot see that it received an answer from the scheme. It was then discovered nearly six years later that the surplus funds hadn’t been paid. The administrators said it hadn’t confirmed where to pay it previously and asked that Royal London pay the funds by cheque to the trustees of the scheme. Royal London confirmed the payment and that it had added interest to bring it up to £981.29, it said this was to invest in an AVC. I don’t know whether the administrators/trustees of the scheme ever confirmed to Royal London how the surplus funds would be used but it was for them to tell Royal London. From my knowledge, in this situation the scheme will usually contact the scheme member to discuss how these funds will be treated. Royal London ultimately wasn’t responsible for how the funds would be applied, it did ask for direction most likely so it could tell Mr M but it appears that the scheme did not provide this. If what Royal London was proposing was wrong in terms of the potential AVC or the sum paid wasn’t sufficient to match what it would have been been, if added to the scheme earlier, this was for the scheme to decide and say at the time. So Royal London did all that was required of it to re-instate Mr M into the scheme as directed by the scheme administrators. This should have achieved for Mr M, the exact position he would have been in had he joined the scheme in July 1993, when he started his new employment. The people best placed to know now whether this has been done correctly are the scheme trustees/administrators not Royal London or our service. In conclusion, I can only look at what Royal London has done, and for the reasons explained above, I think it has acted fairly and reasonably and has done what was expected of it to ensure Mr M was put back into the correct position. My assumption is that this was achieved as the scheme directed Royal London on what to do and it is the expert on this matter. If it was not achieved, it stands to reason that this was either due to an error made in the re- instatement process or an error now in calculating the benefits. But neither of these errors would be of Royal London’s making. With regards to considering Mr M’s benefits in

-- 5 of 6 --

6 comparison to his colleagues, again the scheme is best placed to do this. We are unable to calculate whether either set of benefits is correct, potentially with more information we could tell Mr M why there may be differences, but this wouldn’t sufficiently put Mr M’s mind at rest. And even if we were able to say there wasn’t any difference and so there must have been an error, this still wouldn’t change the outcome of this complaint. As Royal London has paid the scheme what it told it was required to re-instate Mr M into the scheme and to put his pension into the position it should have been in had but for the advice it gave. So I won’t be upholding this complaint, I know Mr M will be disappointed but I hope my explanation as to why will be helpful to Mr M going forwards. My final decision For the reasons explained above, I do not uphold this complaint and make no award. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 26 May 2026. Simon Hollingshead Ombudsman

-- 6 of 6 --