DISP App 4.2 Application

1This appendix sets out the rules and guidance about the steps firms should take and the assumptions firms should use to:

1. (1)

   calculate the redress (if any) to offer to a consumer, their spouse or their dependant(s) for non-compliant pension transfer advice which resulted in the consumer transferring out of a defined benefit occupational pension scheme and into a defined contribution pension scheme; and

2. (2)

   make a redress offer to a consumer or their beneficiary.

1Where a firm upholds a complaint concerning a non-joiner, pension opt-out or FSAVC case, the firm may use this appendix as a basis for calculating and offering redress, to the extent that it is appropriate to do so and subject to the particular circumstances of the case.

1. (1)

   1This appendix should be considered alongside applicable rules and guidance in DISP 1. Where this appendix does not address the particular and individual circumstances of a consumer’s complaint, a firm should address such circumstances:

   1. (a)

      in a way which is consistent with the rules and guidance in this appendix; and

   2. (b)

      in accordance with their obligations in DISP 1.4.1R.

2. (2)

   Firms should also consider how the Financial Ombudsman Service has taken account of such circumstances when determining similar complaints (DISP 1.4.2G).

3. (3)

   To the extent that taking them into account would be consistent with a firm’s obligations in this appendix and DISP 1.4.1R, relevant guidance in DISP 1.4.2G(3) includes the provisions designated by the Financial Services Authority in November 2001 in the Designation of Pensions Review Provisions Instrument 2001 (as amended).

4. (4)

   When calculating redress in accordance with this appendix, firms should:

   1. (a)

      take into account all relevant factors, including any known or anticipated changes in circumstances which may impact on the value of the redress which would be appropriate; and

   2. (b)

      act fairly when assessing what redress is appropriate in light of such circumstances.

5. (5)

   In DISP App 4.2.5G(4)(a), relevant changes in circumstances may include changes in the value of the consumer’s notional rights in a ceding defined benefit occupational pension scheme, which are certain and quantified, and which are known, or reasonably ought to be known, by the firm at the calculation date.

1. (1)

   1A firm may use actuarial software which is compliant with technical actuarial standards to undertake the relevant calculations, to the extent that they have the competence to do so.

2. (2)

   The type of adjustments where firms should confirm their approach with an actuary include removing the effect of contributions into the consumer’s DC pension arrangement that were not part of the cash equivalent transfer value.

3. (3)

   If a firm has had confirmation from an actuary that its approach to relevant elements of the valuation is appropriate, that approach can be used for materially similar cases without needing to obtain actuarial approval each time.

4. (4)

   If a firm lacks competence to carry out any parts of the redress calculation in this appendix, including rolling up payments to allow for the passage of time, it should refer to an actuary.