DRN-6158076

The complaint Mrs M, through her representatives, has complained about a transfer of her personal pension she held with The Prudential Assurance Company Limited to a small self- administered scheme (“SSAS”) with Cantwell Grove in 2016. Her SSAS was subsequently used to invest in a hotel development with the Resort Group (TRG) in Cape Verde. The investment now has no realisable value. Mrs M says she has lost out financially as a result. Mrs M says Prudential failed in their responsibilities when dealing with the transfer request. She says that they should have done more to warn her of the potential dangers of transferring, and undertaken greater due diligence on the transfer, in line with the guidance she says was required of transferring schemes at the time. What happened Prudential received a request for Mrs M’s pension to be transferred to a SSAS in July 2014 with the intention for it to be invested in a hotel development through The Resort Group (TRG). Prudential wrote to Mrs M on 25 July 2014 to say that they had carried out checks recommended by the Pensions Regulator which had highlighted some concerns about her proposed transfer. They warned her about pension liberation which could be serious for consumers and was often associated with fraudulent activity. They listed a number of warning signs which they said might apply to her circumstances. The ones that applied to Mrs M were: • The pension plan holder is often below age 55 • The plan holder is often not employed by the sponsoring employer of the receiving pension scheme • The plan holder is often not located in the same geographical area as the sponsoring employer • The sponsoring employer / trustees / administrators have not been registered as legal entities for any significant length of time • There’s often no evidence that the adviser/receiving scheme administrator/trustees are registered with an appropriate regulatory body e.g. the Financial Conduct Authority Prudential warned of the serious consequences of Pension Liberation and they enclosed a leaflet about Pension Liberation Fraud (which would have been the Scorpion leaflet likely in the version of July 2014) and a link to The Pension Advisory Service Website. The Scorpion leaflet would have warned about cold calls and being offered a free pension review offering one-off investment opportunities. Prudential strongly suggested to Mrs M that she should seek independent financial advice from an FCA regulated adviser about the consequences of the proposed transfer and consider whether she wanted to proceed. They also warned that dealing with any unauthorised intermediary would mean she wouldn’t be covered by the Financial Services

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Compensation Scheme (FSCS) or by the Financial Ombudsman Service if things went wrong and that Mrs M could face potential tax charges or lose her pension fund. Prudential said given their concerns and HMRC currently being in the process of deregistering hundreds of pension schemes due to liberation concerns, the details of which were not yet public, they were unable to carry out her instructions to transfer her pension. Over a year later, in August 2015, Mrs M wrote to Prudential to request the same transfer again. Prudential asked for more information from Cantwell Grove and also wrote to Mrs M on 6 October 2015. They told her that Cantwell Grove had contacted Prudential to request a transfer and that they weren’t regulated by the FCA. They asked her who had originally contacted her about transferring to a SSAS, who had advised or introduced her to Cantwell Grove and whether she had received any advice on establishing a sponsoring employer firm. They asked her whether she had received any advice from an FCA regulated firm and to provide any documents she had received. Mrs M responded on 18 November 2015. She explained she had been contacted originally by First Review Pension Services (FRPS) about a pension review. After consultation she decided to establish a SSAS and it was FRPS who referred her to Cantwell Grove. She wished to take advantage of the flexibilities of a SSAS and she used her own company (which was dormant) to establish and sponsor the SSAS. She explained she had not received any financial advice to establish the SSAS and transfer her pension and she had not received any advice from a regulated adviser. Prudential wrote to Mrs M again on 7 December 2015. They reiterated that they were investigating potential scam concerns and explained that they still had concerns about Mrs M’s transfer which included her being under 55, that she established her own employer firm to set up a SSAS and that she was planning to invest into an unregulated overseas investment. They pointed Mrs M to a Pension Scam alert published in October 2015 by The National Fraud Intelligence Bureau and the City of London Police which referred to customers being cold called to transfer their pensions and specifically related to investments in alternative commodities such as hotel developments or property in Cape Verde. They asked Mrs M to ensure she fully understood the scheme and risks. Prudential explained that if Mrs M still wanted to proceed they would allow the transfer due to her statutory and contractual rights to proceed after a “colling off period” of 90 days, however they specifically noted this didn’t mean they were endorsing the transfer. They again strongly recommended using those 90 days to speak to a regulated financial adviser and repeated the risks of having no access to the FSCS and our service if she was dealing with an unregulated intermediary and she could lose her pension funds or risk tax charges. They also provided the website details of the Pension Regulator and the Pension Advisory Service which would contain more information on pension scams. And they attached another Scorpion leaflet which set out the warning signs of pension scams. The version of the leaflet at the time which was issued in March 2015 mentioned warnings signs of a scam as: cold calls, offers of a free pension review, mentioning one off investment opportunities and convincing marketing materials offering returns of over 8% (which we know was the case with TRG investments). By this point the warnings were not just about pension liberation, but wider scams. Prudential asked, that if she wanted to proceed, she needed to sign a declaration which said:

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I acknowledge that Prudential has raised concerns about the proposed transfer of my pension because of concerns that it could involve a pension scam and/or pensions liberation. I confirm that I have read The Pensions Regulator’s booklet on pension scams and I understand that Prudential takes no responsibility and accepts no liability for the consequences of the transfer of my pension, including as a result of tax charges I may face, loss of assets, the suitability of any investments or any other loss I may suffer. Mrs M signed this declaration in December 2015 and ticked a box to say she had not received any advice. The transfer proceeded in March 2016 after the cooling off period. Mrs M complained in 2025 to Prudential about insufficient due diligence and warnings to her at the time of the transfer. Prudential rejected the complaint, but despite likely regulatory time limits which would apply here, they consented to our service considering Mrs M’s complaint. One of our investigators considered that Prudential had provided appropriate warnings to Mrs M and didn’t uphold the complaint. Mrs M’s representatives disagreed and so the complaint was referred to me for an ombudsman’s decision. 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. There is no dispute that Prudential should have undertaken some due diligence here taking into account the Scorpion guidance published by Pensions Regulator and the PSIG Code of Good Practice. As an FCA regulated firm, they also had to follow the Principles for Businesses (PRIN) and COBS 2.1R (the client’s best interest rule). It’s important to point out that the guidance and PSIG code were essentially informational and advisory in nature. Deviating from it doesn’t therefore mean a firm has necessarily broken the Principles or COBS rules. Firms were able to take a proportionate approach to transfer requests, balancing consumer protection with the need to also execute a transfer promptly and in line with a member’s right to transfer. I’m satisfied Prudential carried out reasonable due diligence taking into account active pension liberation concerns in 2014; and in 2015 by asking for the relevant information from Cantwell Grove as well as asking Mrs M relevant questions about the circumstances of her transfer. It’s also clear that they did identify that Mrs M was likely at risk. The dispute here is whether Prudential’s warnings to Mrs M were sufficient. And I agree with the investigator that the warnings were reasonable and appropriate here. It’s very clear from the communications sent to Mrs M that Prudential had scam concerns about her individual transfer and they gave her information about the warning signs of a scam which directly related to her (cold call, unregulated parties offering a pension review, high returns, overseas investment in hotels in Cape Verde which had been investigated by Action Fraud, establishment of a SSAS and sponsoring employer). They also pointed out the consequences of dealing with unregulated parties and strongly recommended speaking to a regulated adviser. I consider Prudential’s letters were strongly worded and left no doubt about their concerns.

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Prudential made it clear that they didn’t endorse the transfer and allowed a cooling off period which enforced some time for Mrs M to properly consider her decision and seek further advice or inform herself more about pension scams with the links and information Prudential had provided to her. Mrs M’s representatives say once they had identified the scam risk indicators for Mrs M they should have intervened, delayed and escalated concerns. I agree, however, I think this is what Prudential did here. They didn’t just send Mrs M generic leaflets about scams. They sent her individual letters telling her they had scam concerns about her specific transfer and why. And knowing Mrs M was planning to invest in a hotel investment in Cape Verde, they pointed her to the 2015 Pension Scam alert which included warnings about consumers being offered pension reviews, establishing a SSAS and investing in hotel investments in Cape Verde. They also didn’t proceed with the transfer in 2014 and allowed for a cooling off period in 2015 to delay any decisions made. I don’t think these warnings and recommendations to take regulated advice were difficult to understand even for a financially inexperienced consumer. I think Prudential took reasonable steps to give Mrs M sufficient warnings, information and opportunity to change her mind. It wasn’t unreasonable to give her these warnings in writing and ask her to sign a declaration which confirmed she understood that Prudential had concerns and that she had read the pension scam warnings. This was another opportunity for Mrs M to pause and think about her actions. Mrs M chose to ignore these warnings. I don’t think it’s fair or reasonable in these circumstances to hold Prudential responsible for the transfer and investment losses that followed. My final decision I don’t uphold Mrs M’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs M to accept or reject my decision before 6 May 2026. Nina Walter Ombudsman

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