The Pensions Ombudsman: dispute resolution and jurisdiction

Background

The DWP is consulting on measures to make new provisions for dispute resolution by The Pensions Ombudsman (TPO). The consultation seeks views on measures to:

• make new provision for dispute resolution by TPO, in particular a function for early resolution of disputes before a determination
• allow an employer to make a complaint or refer a dispute to TPO on behalf of itself, where for example the employer chooses a group personal pension arrangement as the scheme for pension provision for their employees
• make provision in relation to associated signposting provisions.

In this response

• General comments
• Measure 1 – Provision for dispute resolution function by TPO
• Measure 2 – Provision to allow an employer to bring a complaint or refer a dispute to TPO on behalf of itself.

General comments

Following the transfer of the TPAS dispute resolution function to TPO in 2018, we welcome this opportunity to contribute to the development of TPO’s early resolution function and the interaction with the existing dispute resolution procedures that exist.

We have not sought to answer every question in the consultation, but focus our attention on those which are most relevant to our practice. In particular, we have not sought to respond to questions 5, 6, 9, and 10.

Measure 1 – Provision for dispute resolution function by TPO, including a function for early resolution of disputes before a determination, following the move of resolution work from TPAS to TPO

Question 1

• How can Government best make provision for dispute resolution by TPO, including a function for early resolution before a determination?

In TPO, complainants have an alternative to formal legal proceedings, through a potentially quicker, and more cost-effective system.

The current process allows for complaints to be resolved without progressing to a full determination, through an adjudicator’s opinion. In our experience, this can be helpful in providing an independent view to a member on their case – this may be the first time in the dispute process that the complainant has received a view on their complaint from outside the scheme’s own internal dispute resolution procedure (IDRP).

At present, the adjudication process may not offer a forum for settlement. It can be seen as simply an informal view on a complaint, which parties are free to disregard and progress to a formal determination.

In our view, something akin to a “without prejudice” process, as commonly used in civil litigation, could be helpful here in allowing parties to explore whether their dispute can be resolved by agreement. We would welcome provision being made within the rules on TPO’s jurisdiction for parties to consider whether referral of a complaint to informal mediation would be appropriate, and that if their conclusion was not to refer, to require a statement of their reasons for this decision.

• Should there be a provision for TPO to make awards or to make such directions as they think fit at the end of any new early resolution process?

A settlement agreement would be a straightforward means of evidencing any agreement reached through the early resolution process. This can be useful where the subject matter of the complaint is sensitive, and one or both parties wish to include confidentiality provisions.

Such a process could usefully be supplemented by the ability for TPO to make an award ordering the payment of compensation in the event of a breach of the settlement agreement. We would not consider it appropriate for the early resolution process to be made binding without both parties consenting to the outcome. The early resolution process should not be another forum for a complaint to be determined but rather a forum for the parties to explore whether common ground can be reached to bring the complaint to a close at an early stage.

• At the end of any early resolution process, what should the legal status be of any agreement reached between the parties?

 We consider that any agreement reached should approved by TPO and be legally enforceable, if necessary, by means of compensation awarded by TPO.

 Question 2

• At the end of an early resolution process where agreement has been reached by all parties, does there need to be provision for TPO to close the case?

Yes. For example, following the conclusion of a settlement agreement which is made in full and final settlement of all claims. Similarly, where a party seeks to pursue or re-open claims which have been compromised, the ability for TPO to refuse to investigate further and, effectively close the case, would be important.

• Where agreement has not been reached or the process fails, should parties have a right to proceed to a full investigation or determination by TPO?

Yes. In our view, any early resolution process should be optional. In cases where early resolution does not succeed, parties should have the right to pursue their complaint to a full determination.

• Should there be specific types of enforcement after the conclusion of any process eg where one party breaches an agreement?

Yes. Again as noted above, we believe that TPO should have the power to award compensation in the event of default.

 Question 3

How should any early resolution process work with an occupational pension scheme’s IDRP?

The IDRP process is a good way for parties to identify issues in dispute. It also remains a practical means for complainants to express their grievances and allow disputes to be resolved without recourse to TPO.

An early resolution process could operate as an alternative to IDRP or as a precursor to IDRP. We would also suggest that early resolution could still be usefully employed following completion of the IDRP in much the same way as TPAS formally operated. There can be occasions where a member does not believe what s/he is told in the IDRP response and early resolution could include the ability of an individual to confirm that the stance taken by a Trustee in IDRP is the correct legal position.

 Question 4

Should provision be made to more clearly signpost who can make complaints to TPO?

Communication is important so that all involved, including potential complaints, trustees and sponsoring employers, have a clear understanding as to how the early resolution process works.

It would be helpful for TPO to provide examples of the types of case it considers suitable for early resolution, as well as those it would not expect to go through this process.

We consider that the early resolution process should be clearly detailed on TPO’s website, and that schemes should be given clear signposting wording to share with members, for example for use in scheme booklets and other member communications.

Measure 2 – Provision to allow an employer to bring a complaint or refer a dispute to TPO on behalf of itself, where it chooses a group personal pension (GPP) arrangement for its employees; and provision for associated signposting provisions.

Question 7

Are there any additional considerations in relation to provision for resolution functions of TPO that you feel have not been captured in the measures above?

As part of TPO’s signposting of its early resolution provisions, it should be made clear that the service is separate from TPO’s adjudicatory function.

We also consider that it in some cases it may be more appropriate for complaints to be considered through the early resolution process in the first instance, instead of through a scheme’s IDRP. It would therefore be helpful for trustees to have the ability to transfer a complaint to early resolution. Many complaints relate to the operation of scheme rules and members insist that they want trustees to consider such complaints. If a trustee board had the ability to transfer a matter into the early resolution process even where a member did not want to, this could help to speed up the resolution of many of the baseless disputes that schemes have to deal with.

Where without prejudice discussions are used with a view to resolving complaints as part of the early resolution process, we consider that details of these discussion should not be made available to TPO in cases where early resolution fails.

Care should be taken to ensure that complaints without merit are still dismissed as part of the early resolution process (as was the case under the former TPAS function), and that the early resolution facility does not become a means to apply pressure for paying members off (particularly given the increased quantum of distress and inconvenience awards) on commercial or convenience grounds.

Question 8

Are there any other functions that could be introduced that would further improve the customer journey?

In our experience, all parties, including complainants, trustees and sponsoring employers, would welcome greater clarity as to the likely timeframe needed to resolve a particular complaint. Regular updates from TPO on progress would go a long way to managing the expectations of all involved.