Ombudsman needs greater powers to oversee pensions

Date31 March 2021
Published date31 March 2021
Yes, it's a curious state of affairs that the FSPO has greater oversight to award compensation against a wide range of financial services providers, including banks, investment advisers and insurance companies, but its powers are so limited when it comes to pensions.

Indeed this year, pensions only accounted for 4 per cent of overall complaints to the FSPO, according to its annual review published on Tuesday. But is it because the pensions industry is near-flawless in its treatment of savers? Or is it rather because the FSPO's hands are so tied when it comes to dealing with complaints?

Up until the end of 2017, the Pensions Ombudsman operated as a separate entity, but was amalgamated with the broader financial services sector from January 1st, 2018. When this happened, the legislative remit of the old Pensions Ombudsman was simply carried over.

Missed opportunity However, this must now be seen as a missed opportunity to ramp up the powers of the FSPO when it comes to pensions.

As the ombudsman himself, Ger Deering, concedes, the powers of the office are "limited" when it comes to pensions.

While he can direct rectification under legislation governing the FSPO, he can't offer additional compensation, as any redress can't exceed any actual loss of benefit under the pension scheme.

So, for example, if you had a legitimate complaint against a pension provider, perhaps around information dispensed by an adviser, but were actually treated in accordance with the scheme rules, then the ombudsman can't compensate you for that. If, however, it was an investment or banking product, then compensation of up to €500,000 could potentially be on the table.

In addition, when it comes to publishing decisions, the office can only publish case studies when it comes to pensions - not the full decision - and nor can he name or shame any pension provider, even if it has had numerous complaints upheld against it.

For many of us, our pension will be our household's biggest asset, greater even potentially than our home. So there is a certain irony perhaps, in the fact that you can complain about a €200 travel insurance policy, and potentially get compensation, but you can't when it comes to your pension.

Surely this should be reviewed.

Legislative lacuna It's not the only place there's scope for enhancing the service of the ombudsman. The office could also be strengthened in a further way; by requiring financial services providers to take systemic action on foot of upheld...

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