DRN-6184531

The complaint Mrs J has complained about the actions of The Royal London Mutual Insurance Society Limited when she tried to transfer her personal pension to a Small Self-Administered Scheme (“SSAS”) in 2025. She says Royal London incorrectly blocked her transfer, causing her financial losses and considerable distress and inconvenience. What happened Mrs J held a personal pension with Royal London. In 2025, she decided to transfer her pension to a SSAS she held with her husband, Mr J. She also started the process to start a transfer from another provider to the SSAS. Mr J also initiated transfers for two of his personal pensions to the same SSAS. So, in total, Mr and Mrs J tried to transfer four pensions to their SSAS. Their intention was to use the SSAS to invest in a commercial property scheme. They only had a certain amount of time before the opportunity to invest in that scheme was lost. Mrs J requested transfer papers from Royal London on 14 January. These were sent to her on 16 January. She returned her paperwork on 12 February. Thereafter, there was a significant amount of correspondence between the parties relating to, in the main, Mrs J’s unhappiness at the lack of progress with her transfer request and Royal London’s due diligence on the transfer, in particular its investigations into Mrs J’s earnings. On 13 June, Royal London wrote to Mrs J to say it wasn’t allowing the transfer. It said, in brief, that Mrs J didn’t have an automatic right under the law to transfer – the statutory right – because she did not receive taxable income. It went on to say it wouldn’t exercise its discretionary powers to allow the transfer. Further correspondence between the parties followed, culminating in Royal London sending Mrs J a letter on 11 July in which it confirmed its previous decision. By this point, Mrs J had referred the matter to us. She thought Royal London had come to the wrong conclusion, especially bearing in mind other firms had allowed transfers to the same SSAS. She wanted us to instruct Royal London to make the transfer and to pay her compensation for her financial losses, the most significant of which related to missing out on the commercial property scheme. Our investigator looked into Mrs J’s complaint. She thought Royal London had made the correct decision. And whilst she recognised delays on the part of Royal London in coming to that decision, she didn’t think this had a financial impact on Mrs J because the intended commercial property investment wouldn’t have been made even if Royal London had given Mrs J its answer sooner. Mrs J asked for an ombudsman to decide on the matter. 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. For the avoidance of doubt, this means I have considered everything Mrs J has said,

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including her references to what she considers to be relevant legal precedent, rules and good industry practice. My starting point here is the Pension Schemes Act 1993 which gives members of most UK pension schemes the right to transfer to another scheme, subject to a number of conditions being met. This is the statutory right. The mechanism for this for those transferring from a personal pension to an occupational scheme (which includes SSASs), is to acquire “transfer credits” under the receiving scheme, which are defined as “rights allowed to an earner under the rules of an occupational pension scheme.” Therefore, if someone isn’t an earner, they have no statutory right to transfer. Royal London sent Mrs J a due diligence checklist on 14 April which set out a series of questions for Mrs J to answer along with documentary evidence for her to provide. This included bank statements showing her salary being deposited, payslips showing earnings for the three months before her transfer request and the SSAS’s scheme rules. Mrs J returned the checklist and supporting evidence on 12 May. Royal London had a due diligence telephone call with her on 20 May. It followed up with an email asking Mrs J to provide its outstanding requirements which included (amongst other things) the payslips, bank statements and scheme rules it had previously requested. On 11 June, after a reminder from Royal London, Mrs J provided further documents but these included bank statements for her SSAS rather than her personal bank account. Royal London emailed Mrs J shortly afterwards to point this out. It asked her to provide three payslips and three bank statements showing her salary being deposited. In response, Mrs J said she didn’t receive payslips because of the nature of her role and she hadn’t recently received dividends. But she attached a letter from the SSAS’s sponsoring employer outlining her employment status. It said the following: “While [Mrs J] has not recently drawn salary via PAYE, she remains a key individual within the company and is entitled to remuneration in line with her role.” On 13 June, Royal London wrote to Mrs J to say she didn’t have a statutory right to transfer because she “did not currently receive taxable income.” Royal London’s letter went on to say that it wouldn’t be exercising its discretion to allow the transfer because Mrs J hadn’t disclosed information about the SSAS’s intended investment beyond it being a commercial property. It said its decision was informed by The Occupational and Personal Pension Scheme (Conditions for Transfers) Regulations 2021 (“the Regulations”). Given the information it had, I’m satisfied Royal London acted correctly. Mrs J hadn’t adequately proved she was an earner so she didn’t have a statutory right to transfer. And it was within its rights to not use its discretion to allow the transfer. Furthermore, I’m satisfied Royal London exercised its discretion in a fair and reasonable manner, a point I will come back to later. On 26 June, Mrs J sent in further information and evidence to progress her transfer, specifically payslips from the sponsoring employer of the SSAS and further detail on her proposed investment. Royal London responded the next day, asking Mrs J to explain the payslips given what the SSAS’s sponsoring employer had previously said about her not receiving a salary. It asked for Mrs J’s P60 and – again – for bank statements showing her receiving her salary. It also asked Mrs J whether she received a salary from a different employer (which would have meant she was an earner) and for further information about the intended investment, a schedule of contributions to the SSAS and its scheme rules. Further information was provided by Mrs J on 1 July but two significant omissions remained – the scheme rules for the SSAS (a different type of document relating to the operation of

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the SSAS had been provided up to that point) and bank statements showing her receiving a salary, all of which had been requested in the due diligence checklist and Royal London’s follow-up emails of 20 May and 27 June. The bank statements were also requested on 11 June. On 2 July, Royal London again asked Mrs J to explain the payslips given what the SSAS’s sponsoring employer, and she, had previously said about not receiving a salary. It asked for bank statements once again and also for further detail about the commercial property scheme. Mrs J responded with some further comments on the intended investment and on her earnings. No bank statements were included. She said the scheme rules had already been provided and she pointed to transfers from two other firms that had been allowed. On 11 July, Royal London wrote to Mrs J to say it was declining her transfer request because she didn’t have a statutory right to transfer because her income was below a minimum threshold. It said it wouldn’t use its discretion to grant the transfer because the SSAS’s scheme rules hadn’t been provided and because of the unusual nature of the SSAS’s intended investment. It considered the former to be a red flag under the Regulations (meaning a statutory transfer couldn’t proceed in any case), the latter an amber flag (meaning guidance from MoneyHelper would have been needed). Again, I’m satisfied Royal London acted correctly. Mrs J didn’t provide adequate evidence of being an earner because she didn’t send in bank statements showing her salary being paid into her bank account. This was despite repeated requests to do so. This meant she didn’t have a statutory right to transfer. Royal London was also within its rights to not use its discretion to allow the transfer and did so in a fair and reasonable manner. On this latter point, the Regulations are a relevant consideration here because they point to the type of risks that a ceding scheme would ordinarily need to be on the lookout for, and what a ceding scheme would need to do in certain situations. As such, I think it’s reasonable the Regulations, and the guidance that sits alongside them, helped inform whether Royal London granted a transfer. With that in mind, I note that in its 13 June letter Royal London said it wouldn’t be allowing the transfer on a discretionary basis because Mrs J hadn’t provided any details about her proposed investment beyond it being commercial property. It said it couldn’t therefore assess the potential risks of Mrs J’s intended investment. This was a reasonable conclusion based on the due diligence checklist Mrs J completed on 12 May: Question: Are you going to invest your pension savings into a property? If yes, please give details. Answer: I am planning to invest in UK commercial property through the SSAS. Question: If you are buying/investing into commercial property, please provide details of the solicitor and surveyor that you are going to use. Answer: Not yet appointed. Professionals will be selected on a case-by-case basis as investment opportunities arise. Under the Regulations, ceding schemes had to understand the intended investments of the transferring member. Clearly Royal London couldn’t do this based on the information provided because Mrs J’s answer indicated the precise nature of her intended investments hadn’t been finalised. Furthermore, Mrs J’s proposed investments, details of which she did later provide, were of the type that would have prompted an amber flag and a referral to MoneyHelper – as Royal London said in its 11 July letter. Mrs J also failed to provide the SSAS’s scheme rules, which can be considered a red flag under the Regulations. As such,

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I’m satisfied Royal London did apply its discretion in a fair and reasonable manner because the Regulations and supporting guidance pointed to a number of potential concerns with the transfer. Our investigator concluded Royal London’s messaging was inconsistent with regards to the importance of her proving she earned above a certain threshold even though not being an earner was reason enough for there to have been no statutory right to transfer. But I’m not persuaded Royal London was at fault in this respect given both the Pensions Scheme Act 1993 and the Regulations were relevant considerations here – as Royal London’s 11 July letter made clear. The former meant there was no statutory right to transfer for a non-earner. But investigations into the amount of Mrs J’s earnings would have been a legitimate line of enquiry had Mrs J ultimately proved she was an earner because Royal London would then need to establish the nature of the link between Mrs J and the SSAS’s sponsoring employer as per the Regulations. As it turned out, Mrs J couldn’t provide sufficient evidence of being an earner so either – or both – the Pensions Act and the Regulations ended up being relevant considerations here. Royal London’s due diligence reflected that duality. I recognise Royal London could have exercised its discretion differently. Mrs J will be aware of a different provider that allowed Mr J to transfer despite it finding he also did not have a statutory right to transfer. It did so after asking Mr J to sign an indemnity protecting it from future claims arising from its decision to allow the transfer. However, it doesn’t follow that Royal London acted in an unreasonable way in not taking the same approach. That said, Royal London did delay matters. Mrs J returned her transfer paperwork on 12 February. But she then had to chase Royal London, prompting her to complain on 4 March. Royal London offered to pay Mrs J £200 compensation to settle that complaint. But it wasn’t until 14 April (after further emails from Mrs J) that it took more substantive action with regards to the transfer, which was sending her its due diligence checklist. This was returned on 12 May and thereafter Royal London was more prompt in its interactions with Mrs J. But that still leaves approximately two months, between 12 February and 14 April, in which there was little in the way of action on Royal London’s part beyond dealing with Mrs J’s complaint. Our investigator thought Royal London should pay a further £300 for the distress and inconvenience it caused, in addition to the £200 it had already paid for this. Taking everything into consideration, I’m satisfied £500 in total is fair and reasonable. Royal London has accepted the investigator’s recommendation. Mrs J thinks £500 is far too low. But our awards in this area do tend to be lower than Mrs J’s expectations. Nevertheless, I think it does recognise the fact that Royal London’s delay straddled a critical period when Mrs J would have felt under pressure to secure her commercial property investment. There isn’t, however, a financial loss that Royal London needs to put right because it wasn’t at fault for the transfer ultimately not going through and it isn’t therefore responsible for Mrs J missing out on her intended investment. Putting things right It follows from the above that I uphold this complaint but only in so far as I agree Royal London caused distress and inconvenience to Mrs J. This should be recognised with a payment to Mrs J of £500 in total. My understanding is that Royal London already paid £200 to Mrs J by cheque in March 2025. If so, it must now pay her the remaining £300. If Royal London hasn’t paid anything for distress and inconvenience to date, then it must now pay Mrs J £500.

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My final decision I uphold Mrs J’s complaint to the extent outlined above. The Royal London Mutual Insurance Society Limited must now pay Mrs J for the distress and inconvenience it caused as outlined above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs J to accept or reject my decision before 25 May 2026. Christian Wood Ombudsman

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