Annual Report (1999/2000) 1

The Pensions Ombudsman's sixth annual report has recently been issued, covering the year to 31st March 2000. The Pensions Ombudsman records that his department over-achieved their productivity targets by issuing over 600 determinations. The satisfying performance statistics are credited to both the Ombudsman's staff and "the decreasing hindrance from lawyers".

There were 619 cases determined in 1999/2000 an increase of 21 per cent from last year. Initial enquiries received by the office also increased to 3,269 (a rise of just under 8 per cent from 1998/1999).

The majority of the telephone enquiries were from people seeking advice and accordingly were referred to the Pensions Advisory Service (OPAS). Of the written enquiries, only a quarter of those received were capable of being investigated by the Ombudsman. Some were not suitable for investigation, in the main, due to the fact that they had not been through the pension scheme's internal dispute resolution procedure.

This left 627 new cases acceptable for investigation, which when added to the 687 cases brought forward from 1998/1999 brought the total number of open cases to 1,314 for the year. Of these, 893 cases were closed during the course of the year, with 619 of these receiving a formal determination.

The most common subject matter of complaints determined was:-

1) Winding up (97 determinations). Within this category delays in winding up was the most common ground for complaint;

2) Calculation of benefits (66 determinations) and incorrect/late or no payment of benefits (62 determinations) were also common problems; and

3) Ill health benefits (60 determinations). The Ombudsman considered this was due to it being a difficult decision making area for trustees.

The Ombudsman noted the growing trend from respondents (or their solicitors) for a preliminary issue to be determined and/or further and better particulars of the complaint. The Ombudsman stated that he does not object to such requests but believes that on occasions these are used as delaying or frustrating tactics and comments "surely such requests are not made to defer the awkward business of having to tackle the substance whilst coincidentally spinning out the financial benefit of the solicitors involved!".

On some occasions the Ombudsman considers that the request for a preliminary issue to be determined incurred more time and cost than would have been incurred had preliminary issues been dealt with at the same point as more substantive issues. As a result, the Ombudsman questions whether certain preliminary issues should not be reserved until after notification of his preliminary conclusions. Of course, if a respondent is successful on a preliminary issue, by raising this in advance it would save the time and expense of preparing a response to the substantive issues.

Directions contained in a determination of the Ombudsman are enforceable in the County Court as if they were an order of that Court. This year the Ombudsman conducted a three month survey, to measure the levels of compliance with his directions.

The results of the survey were:
Survey Total 61 cases
Survey Replies 55 cases
Directions fully complied with 34 cases
Main direction complied with 5 cases
Directions not complied with 16 cases

The Ombudsman suggests that the "unwieldy big stick of County Court enforcement" is to blame for non compliance and may conduct a longer term survey in the future. He has also suggested the possibility of producing a name and shame list of respondents noting the promptness of their compliance.

The Ombudsman became involved in actual enforcement proceedings in a Scottish case, which involved a firm of solicitors as respondents, who had not complied with a determination six months after it had been issued. The Ombudsman's office made a complaint to The Law Society of Scotland, in an attempt to get the respondent to comply. This complaint was not upheld much to the Ombudsman's annoyance. Finally, fourteen months after the Ombudsman's determination was issued, the respondent paid the sums due together with solicitors fees, avoiding the need for court action.

There were 9 judgments delivered on appeal from the Ombudsman's determinations this year. The Ombudsman comments of his disappointment at the "...extraordinary waste of time and money ... " which he considered was involved in at least 4 of the cases which went to appeal, providing what he considers as "compelling reasons" to remove any automatic right to appeal to the Courts.

The Ombudsman considers that an appeal from his determinations ought to require permission either from himself or the Court, bringing it into line with the Pensions Appeal Tribunal.

The Ombudsman also notes a trend in the attitude of the judiciary from "ombosceptic towards ombophile".

The Ombudsman commented upon the decision of the Court of Appeal in [1999] 4 ALL ER 546 regarding it is unsatisfactory, first for discriminating against pensioners and secondly for curtailing his jurisdiction. He considered that the overturning of his decision that it was unfair for pensioners to be excluded from the benefit improvements because this did not equate to the decision being perverse was a question of "judicial semantics rather than substantive merits". On the decision that the Ombudsman had no power to investigate matters which could adversely affect members not party to the dispute he saw this as rendering his role inoperative. The Ombudsman referred to the proposed changes to his jurisdiction contained in the Child Support Pensions and Social Security Bill.

In appeals were brought against the Ombudsman's preliminary determination as to jurisdiction to investigate several complaints. Lightman J delivered judgment, which whilst holding that the High Court had no jurisdiction to consider the Ombudsman's decisions on preliminary issues, did give permission for Legal and General to bring judicial review proceedings. In addition to challenging the preliminary determination on jurisdiction, there was an attempt to appeal on a point which the Ombudsman had not considered at all, concerning the pension schemes insurance contract.

Ultimately, there was no appeal and the judicial review failed, leaving the Ombudsman questioning what useful purpose had been served at all, except this being " ...just another battle in the war being waged (or salaried) by certain lawyers at the expense of their clients against alternative dispute resolution".

The Ombudsman provides brief comments in the case of , as permission to appeal the judgment of Lightman J is still being sought.

In his determination the Ombudsman found the trustees guilty of deliberate breach of trust, meaning that the exoneration clause provided no protection. This resulted in two trustees being directed to make good improper loans and pay compensation totalling £350,000. One trustee appealed and the Ombudsman had the matter remitted to him to re-determine whether the trustees were protected by the exoneration clause. In his second determination the Ombudsman decided, as a finding of fact, that neither trustee were protected by the exoneration clause.

Lightman J concluded that owing to the seriousness of the allegations, the Ombudsman must provide substantive evidence to justify his findings, which he considered the Ombudsman had failed to do. Lightman J found the Ombudsman's determination untenable and held that the exoneration clause did apply.

The Ombudsman quotes the Independent Trustee as saying "Robert Maxwell must be turning in his grave; if only he had realised that exoneration clauses could be interpreted so widely!".

Overall the Ombudsman is encouraged by the improving judicial attitude towards his determinations and acknowledges that whilst the year commenced with two "high profile but low minded judgments" there were also judgments which were "sympathetic and supportive".

Finally the Ombudsman did spare a thought for the complainants particularly those whose complaints he had not upheld. He referred to one letter from a disappointed complainant which cryptically ended:

"You may be godly in act and thought, but only God had the final say (and Magnus Magnusson)."