Pensions Ombudsman Finds in Favour of Identity Fraud Victim

The complainant, Mr N, had a SIPP held with Embark, and was using St James’ Place as his financial adviser. In his case he outlined that, in early April 2019, he emailed Embark to request a withdrawal of £20,000 from his SIPP into the bank account the firm had on record for him.

Two days later, Embark emailed Mr N to confirm that the payment would be made into the account on record. However, the email was intercepted by a fraudster who replied to Embark – posing as Mr N – and requested the payment be made to a new bank account. Embark requested certified copies of the new bank account statement, which the fraudster allegedly provided.

In the meantime, Mr N received his initial £20,000 as requested, but the fraudster then completed and returned completed sale and income forms for the new bank account and Embark approved a further withdrawal of £20,000 into the new account. Mr N found out about the second withdrawal later that month when his Financial Adviser at St James’ Place (SJP) advised that his SIPP was showing withdrawals of £40,000.

SJP liaised with Embark, who confirmed that Mr N’s email address had been compromised, allowing the fraudster to access £20,000 from his SIPP; Embark attempted to recover the money lost and offered £12,202.20 compensation. Mr N requested that SJP cover the shortfall, which the firm refused, and so he rejected the offer and took his case to the Pensions Ombudsman.

Mr N appealed to TPO and requested that the firm recover the £15,797.80 lost as a result of the scam – £20,000 minus tax of £4,202.20, which Embark had deducted and returned to the account. He claimed that the firm should not have simply complied with the fraudster’s instructions and should have confirmed any change of bank account with him over the phone, rather than simply by email. He also requested that the firm review its internal procedures to prevent further similar situations happening to other customers.

Embark argued that its SIPP terms and conditions did not cover the manner in which a client would be contacted when requesting withdrawals and that accepting copied documents was sufficient.

The TPO investigator ultimately found that while it had “sympathy for the position Embark was confronted with”, the firm did not act with reasonable skill and care, and Mr N’s complaint was therefore upheld. Mr N was compensated with sufficient funds to ensure that he had the same number of units as he did before the fraud, and he was also awarded a further £1,000 for the “serious stress and inconvenience”.

Mr N’s case is just another example of fraudsters using deception and loopholes to get their hands on victims’ money.

There are a range of different types of scams that the specialist fraud team at TLW Solicitors see targeting those saving for their retirement, including:

• Impersonation and interception scams
• SIPP (self-invested personal pension) mis-selling;
• Pension Mis-selling;
• Transferring out of a Defined Benefit/Final salary scheme;

Mr N’s case was a sophisticated impersonation and interception scam where the fraudster gained access to his email account, intercepted an important email, and used this information to access his hard-saved SIPP. However, as stated by the Pensions Ombudsman, the loss was not his responsibility, and his SIPP administrators – who he had entrusted to handle his money – could and should have done more to investigate and confirm the legitimacy of the transaction.

Sarah Spruce, Head of TLW Solicitors’ Pensions Scams team, commented:

“Whether or not Embark had recently liaised with Mr N on his first SIPP withdrawal, a second request – with instructions to change the bank details – should have raised red flags and prompted at least a phone call to confirm the change. Clients like Mr N are entrusting their savings to firms like this, who have a responsibility to ensure that checks are being taken to safeguard that money, even if it means delaying the withdrawal slightly. Better safe than sorry!”

If you, or a friend, or loved one, have lost money in a similar scam and are not sure what your next steps should be, speak to the team at TLW Solicitors. We have extensive experience in dealing with complex Ombudsman complaints, even if your complaint has been knocked back. We understand the timescales and evidence requirements, and we understand how to respond to any challenges.