Local Government Pension Scheme · CAS-69397-X3Y6

CAS-69397-X3Y6

Ombudsman’s Determination Applicant Mr N

Scheme Local Government Pension Scheme (LGPS)

Respondent London Pension Fund Authority (LPFA)

Outcome

Complaint summary Mr N’s complaint is that LPFA, transferred his benefits into Good-En Limited SSAS (the SSAS) without carrying out adequate due diligence and, as a consequence, his pension funds were lost.

Mr N would like LPFA to put him back into the position he would have been in had the transfer not gone ahead.

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the main points.

On 14 February 2013, The Pensions Regulator (TPR) launched a new awareness campaign regarding pension liberation scams. TPR said that members who were thinking of transferring should be provided with an information leaflet (the Scorpion Leaflet), which contained a number of warnings about potential scams.

The Scorpion Leaflet included examples of real-life pension scams and explained that the warning signs of a potential scam could be that the:

• receiving scheme was not registered, or only newly registered, with HM Revenue & Customs;

• member was attempting to access their pension before age 55;

• member has pressured trustees/administrators to carry out the transfer quickly;

• member was approached unsolicited; 1 CAS-69397-X3Y6 • member had been informed that there was a legal loophole; and

• receiving scheme was previously unknown to you, but now involved in more than one transfer request.

“I have also attached a document produced by the Pension regulator (TPR).”

2 CAS-69397-X3Y6 “If you wish to proceed with your request to transfer, we will need to carry out further checks with TPR, Financial Conduct Authority and HMRC and I will require the attached declaration and request for payment of transfer value to be completed before we will be able to release any payment.”

“I understand and accept that:

It is my responsibility to ensure that the benefits the transfer value buys are suitable for me and my family and that no responsibility for this rest with the LPFA or my former employer.”

“No. Done my own research”

“Can you please do a pension liberation check, as we are in the process of paying out the benefits.”

On 25 June 2020 Ms N’s representative raised a complaint with LPFA.

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Mr N submits:-

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Summary of LPFA’s Position

27. LPFA submits:-

Adjudicator’s Opinion 28. Mr N’s complaint was considered by one of our Adjudicators who did not uphold the complaint. The Adjudicator’s findings are summarised below:-

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29. Mr N did not accept the Adjudicator’s Opinion and provided further comments in response, so the complaint was passed to me to consider. I agree with the Adjudicator’s Opinion, although my reasoning differs.

6 CAS-69397-X3Y6 Ombudsman’s Decision 30. I considered the obligations (if any) of trustees, managers and the scheme administrators of occupational pension schemes to carry out additional due diligence (i.e. beyond that required by the 1993 Act) in respect of statutory transfers in the Determination of Mr D v Open Trustees Limited (CAS-81940-Z2S8) – 26 August 2025 (Mr D v Open Trustees Limited). The analysis looked at the position in law prior to The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 coming into force. In that Determination, I set out in detail my view that there was not a general duty on the trustees or managers of occupational pension schemes to carry out the additional due diligence set out in TPR’s 2013 Action Pack, and then warn the applicant of any ‘red flags’ that may arise from that check.

31. However, I pointed out that there could be situations where a trustee or manager nonetheless decided to carry out that additional due diligence – and thus voluntarily assumed some responsibility to the member1.

32. I consider that my analysis in Mr D v Open Trustees Limited is also relevant to this complaint (and the analysis in that Determination should therefore be read in conjunction with this one). Accordingly, it is my view that LPFA only had a duty to undertake the checks and due diligence necessary to fulfil the express statutory requirements within the 1993 Act, and not the additional due diligence set out in the 2013 Action Pack.

33. Mr N has complained that the LPFA transferred his benefits into the SSAS without carrying out sufficient due diligence and that, as a consequence, his pension funds have been lost. He would like to be put back into the position he would have been in had the transfer not gone ahead.

A duty of care?

34. Applying the analysis set out in Mr D v Open Trustees Limited, LPFA did not have:

(i) a statutory duty under the 1993 Act to undertake the additional due diligence set out in TPR’s 2013 Action Pack. As set out in Part 4ZA of the 1993 Act, LPFA is only required to undertake the checks necessary in accordance with the 1993 Act and subordinate legislation;

(ii) nor did it have a common law duty of care to undertake the additional due diligence set out in TPR’s the 2013 Action Pack as, amongst other arguments, this would hinder the performance of its statutory obligations. Notably, in the 2011 Court of Appeal case of Desmond v The Chief Constable of Nottinghamshire Police2, Sir Anthony May comments, “the common law should

1 See paragraphs 159 to 172 of Mr D v Open Trustees Limited. 2 Desmond v The Chief Constable of Nottinghamshire Police [2011] EWCA Civ 3

7 CAS-69397-X3Y6 not impose a concurrent duty which is inconsistent, or may be in conflict with, the statutory framework”.

Voluntary assumption of responsibility?

35. The exception, where a duty of care may exist, is if LPFA had voluntarily assumed responsibility for undertaking the additional due diligence set out in 2013 Action Pack. However, in order to establish that such a duty of care does exist, it would be necessary to find that3:

• LPFA had ‘voluntarily assumed responsibility’ to carry out the additional due diligence contained in the 2013 Action Pack and warn Mr N of red flags arising from those checks (notwithstanding that it was under no obligation to do so);

• Mr N placed reasonable reliance on LPFA doing that; and

• it was reasonably foreseeable to LPFA that the member would be relying on it to carry out the additional due diligence to a reasonable standard, and then warn Mr N if there were ‘red flags’ arising from those checks.4

Had LPFA voluntarily assumed responsibility to carry out the additional due diligence contained in the 2013 Action Pack and warn Mr N of red flags arising from those checks?

36. Having considered the evidence provided above, in particular the letter of 26 June 2014, I do not find that a commitment was made by LPFA to contact Mr N if it encountered any concerns as required in TPR’s 2013 Action Pack. The wording itself, with reference to TPR, the Financial Conduct Authority and HMRC, does not refer to pensions’ scams or concerns to the extent that Mr N could reasonably rely on LPFA to undertake the checks set out in the 2013 Action Pack as referenced in his initial submissions.

37. However, the internal LPFA email of 23 July 2014, does suggest that LPFA undertook some pension liberation checks and undertook a degree of responsibility to do more than that which it was required to do under the 1993 Act. However, whether or not LPFA assumed any voluntary responsibility to conduct any ‘additional’ due diligence,

3 See Steel v NRAM Limited [2018] UKSC 13 – particularly paragraphs 18 to 24. 4 Voluntarily agreeing to do a task, that a respondent was otherwise not obliged to do, will not in and of itself mean there is an assumption of responsibility in the sense of assuming legal liability. Rather, as set out in the second and third limb of this test, there also needs to be reasonable reliance placed on that undertaking. So, the mere fact that a trustee had attempted to carry out additional due diligence would not necessarily be sufficient to find a duty of care, if the member was unaware that this was happening and had no reason to believe that the trustees were doing it. There is a considerable body of case law on the voluntary assumption of responsibility, and this is only a summary of the principles applicable in this case. Cases considering the voluntary assumption of responsibility as a basis for liability in tort for pure economic loss include HM Commissioners for Customs and Excise v Barclays Bank [2006] UKHL 28; Steel v NRAM [2018] UKSC 13; Phelps v Hillingdon LBC [2001] 2AC 619 (HL); Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665, and Hamble Fisheries Ltd v L Gardner & Sons Ltd (The Rebecca Elaine) [1999] 2 Lloyds Rep 1. 8 CAS-69397-X3Y6 it is not clear to me that this extended to an assumption of responsibility to warn Mr N of the outcome of those checks.

I am not of the view that Mr N did place reasonable reliance on the LPFA to undertake additional checks and warn him of the outcome.

Firstly, from the documentation I have seen there is no outward expression by LPFA that it would conduct the additional due diligence in the 2013 Action Pack and warn Mr N if there were red flags arising from those checks. The internal email referred to in the previous section and references to contacting other agencies does not amount to such a representation – and therefore, logically, I fail to see how Mr N could argue that he was reliant on LPFA doing something that he had not been told that it would do.

Secondly, Mr N voluntarily signed a declaration on 1 July 2014, which is noted in paragraphs 16 to 18 above. This included a reference to Mr N accepting that it was his “…responsibility to ensure that the benefits the transfer value buys are suitable for [him] and [his] family and that no responsibility for this rests with the LPFA or [his] former employer”. In my view, as a result of this disclaimer, Mr N cannot argue that he reasonably relied on any voluntary, additional due diligence being carried out by LPFA5. He accepted his own responsibility for the transfer.

Thirdly, on the evidence, Mr N did not as a matter of fact rely on LPFA in any event. As my Adjudicator pointed out in paragraph 19, Mr N acknowledged that he had “done [his] own research” into the transfer.

In considering the above, I find that Mr N did not place reasonable reliance on the LPFA to protect his interest.

43. Again, based on the signed declaration of 1 July 2014 and other documentation referred to above, I find that there was no reason for LPFA to have foreseen that Mr N was relying on being warned of the outcome of any additional due diligence being carried out by LPFA. LPFA had made it clear that Mr N was ultimately responsible for the risks he was assuming in going ahead with the transfer, Mr N accepted that position in signing the disclaimer and indeed told LPFA that he had carried out his own research into the transfer.

5 See the discussion of Hedley Byrne v Heller & Partners [1964] AC 465 in Steel v NRAM Limited [2018] UKSC 13, per Lord Wilson at paragraph 18, and in particular: “In the Hedley Byrne case the appellant asked its bankers to inquire into the stability of a company and, in response to the inquiry, the company’s bankers, acting (so it was assumed) carelessly, gave false information about the company, which it expressed as “without responsibility” but on which the appellant relied to its detriment. Because of the disclaimer the appellant’s claim against the company’s bankers failed.” [My emphasis] 9 CAS-69397-X3Y6 44. Having considered the three separate requirements above, I acknowledge that LPFA may have undertaken some additional due diligence checks beyond those required by the 1993 Act. However, I cannot see that it voluntarily assumed a responsibility to warn Mr N of the outcome of those checks. Furthermore, and in any event, I do not consider that the second and third limbs of the test are satisfied. For this reason, I find that LPFA did not voluntarily assume responsibility to undertake the additional due diligence that Mr N refers to in his submissions, such that it would support a claim in negligence against LPFA.

45. I find that LPFA did not have a statutory duty arising from the 1993 Act to undertake the checks set out in the 2013 Action Pack, nor did it have a common law duty of care to undertake that additional due diligence.

46. As Mr N had a statutory right to transfer, I find that LPFA therefore met its statutory obligations to action Mr N’s transfer request.

I do not uphold Mr N’s complaint.

Dominic Harris

Pensions Ombudsman 30 January 2026

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