Pensions disputes briefing – July 2014

Top Tips for Managing Complaints – IDRP and the Pensions Ombudsman

It is a statutory requirement for pension schemes to establish and implement a formal process for resolving complaints – this is known as the internal dispute resolution procedure (or IDRP). It is also necessary for member complaints to have been through the scheme’s IDRP before the Ombudsman will investigate a case.

Managing complaints efficiently and adopting the right strategies for resolving them are two of the key means by which trustees can make best use of the IDRP. And the process does not start with the IDRP – early correspondence or telephone calls with members can often help alleviate concerns and avoid any misunderstandings before they develop into something more substantial.

Key points

Who is the complaint really against? It might be the case that a member’s complaint is really against an employer’s decision or an administrator’s error. Directing the member promptly to the appropriate person to deal with the matter or answer any questions may be a quick way to avoid a complaint being made against the trustees altogether.
Time limits must be considered. A limitation defence might be a complete and justifiable answer to a complaint regarding historic events. So it is worth always considering whether it may be applicable and it might be something to include in the IDRP response.
Apologising may be appropriate. If something has gone wrong, consider whether an apology is appropriate as it may help to diffuse the situation. A well-worded apology need not be viewed as an admission of liability.
We set out below some general observations and tips for effective complaints management policies and procedures.

Early stages

A concerted effort to answer a genuine query or complaint at an early stage pays dividends. This allows the member to feel they are being listened to and in many cases a misunderstanding or error can be swiftly resolved.

Avoid, if possible, the situation becoming entrenched or hostile at the initial stage. At the early stages the member is likely to want to resolve an issue rather than go down a formal dispute route. A conciliatory approach may help bring the matter to a conclusion more quickly.
Just because the member has asked for a particular document or information does not mean he should be given it. Although transparency has many virtues, there may be situations (such as confidentiality) where it is inappropriate to comply with a member’s request.
When it appears the initial correspondence with the member has reached an impasse, it is good practice to mention the existence of the IDRP to escalate the matter if the member so wishes. At the same time the member should be notified of the services of TPAS who can provide independent assistance to the member at any stage during the complaint.

Making best use of the IDRP

Remember that the scheme rules and the law can be confusing to members, even though you will be familiar with them.

Always try to put yourself in the member’s shoes when communicating with them, whether about the IDRP itself or the substance of the complaint.
Even if a complaint is not upheld in substance, if the member has suffered distress and inconvenience as a result of maladministration then it may be appropriate to recognise that by offering a small monetary award along the lines that the Ombudsman would award.
Not all complaints can be definitively answered. Where there is uncertainty, whether factual or legal, it may be appropriate to seek to settle the complaint on a full and final basis and other reasonable terms, such as preserving confidentiality.

Complaints to the Ombudsman

The Ombudsman’s decision is binding unless appealed, so it is important to take care that the response addresses all the issues raised in the complaint and all the arguments you want to make in reply.

Consider whether potential issues such as limitation, exoneration under the scheme rules or other jurisdictional arguments (such as the Edge principle) might arise to bring the investigation to a quick conclusion.
Follow any procedural deadlines set by the Ombudsman and make contact at an early stage if you require further time to response, eg if historic documents need to retrieved from archive or professional advice is required.
Complaints can often involve complicated historical events. Setting them out clearly with a chronology and a summary of your submissions will help avoid any misunderstanding by the Ombudsman’s office and help ensure all the points are covered.
In the response, you are not limited to only making the arguments raised during the IDRP.
Any directions made by the Ombudsman should be taken seriously and complied with.
Members generally are not entitled to recover costs and expenses incurred in pursuing a complaint to the Ombudsman unless there are exceptional circumstances.
Any party wishing to appeal from a decision of the Ombudsman will be required to obtain permission to appeal from the High Court. This is a helpful recent development which is designed to avoid inappropriate points being taken to appeal.