Prudential Assurance Company Limited · DRN-6174893

The complaint Miss C wants to transfer her Prudential Assurance Company Limited personal pension to Small Self-Administered Scheme for her and other members of her family. She complains that Prudential initially refused to make the transfer having identified a ‘red flag’, and now requires her to attend a MoneyHelper appointment because of an ‘amber flag’. She also complains about delays during the process which have caused her to miss out on investment opportunities within the SSAS. What happened Miss C holds a personal pension with Prudential which was worth £44,110 in September 2023. The business of her family, incorporated in August 2020, acts as sponsoring employer to the SSAS which was established in July 2021 with a trust deed dated March 2021. She considers she first made the transfer request around 5 February 2024. However, the evidence Miss C has provided of instructing the transfer was when her brother told the SSAS administrator on that date, “My sister wants to join the pension scheme and transfer her pension.” There’s no evidence of Prudential having a valid transfer request on that date. 28 October 2024: Prudential first heard about the request when the SSAS administrator SSAS sent it through an online transfer system called Origo Options. This system is intended to be paperless, so it doesn’t as I understand it allow for documents such as the receiving scheme rules to be attached to the request. 30 October 2024: Prudential wrote to Miss C acknowledging the transfer request. It explained that in order for it to proceed with the necessary due diligence checks, she would need to return the following information: • A copy of the HMRC registration letter for her SSAS • A copy of the trust deed and rules • Confirmation of whether she’d received financial advice about the transfer, if so the adviser’s name and address • Details of the investment providers or proposed investments to be made within the SSAS • Copies of any promotional material, emails or letters she’d received about the SSAS • Details of how you became aware of the SSAS and what she’d been told about it. 21 November 2024: Prudential updated Miss C that it was dealing with her transfer request. It explained the Regulations which applied to protect her from the risk of a pension scam, and confirmed it had started the checks required and would let her know if it required any further information. 12 December 2024: Having not received a response to its 30 October letter, Prudential wrote to Miss C asking for the same information again. 27 January 2025: Prudential declined the transfer, explaining it was concerned about some of the circumstances surrounding the transfer and adding: “You’ve failed to respond (either in whole or in part) to our requests for information in our

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letters…This is a Department for Work and Pensions (DWP) Red Flag in the pension scams regulations (The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021…As we’ve been unable to satisfy the First Condition or the Second Condition in the pension scams regulations, you’ve lost your statutory right to a transfer.” 27 January 2025: Prudential also emailed Miss C’s SSAS administrator confirming they had requested information from her without success and asked for the request to be cancelled or the requirements provided within the next three working days. 29 January 2025: Miss C emailed Prudential in response to contact from the administrator, saying she had filled in all the appropriate paperwork for the transfer. She asked what information was needed as no phone number was provided to contact Prudential. 30 January 2025: Prudential re-requested all of the information it had asked for in October and December 2024. 5 February 2025: Miss C emailed Prudential and also phoned to give her brother (who is also a member of the SSAS) authority to discuss the transfer. They explained they hadn’t received Prudential’s earlier letters. 12 February 2025: Prudential told Miss C and the SSAS administrator that it had passed the information provided to its customer service team, but the PDF documents sent didn’t make it through the firewall. Prudential reminded the SSAS administrator that it previously said not to use this email address and instead use a postal address. 12 February 2025: Miss C emailed Prudential a printout of the scheme’s HMRC status, deed of appointment, Trust Deed, and confirmation she hadn’t taken financial advice. She explained the sponsoring employer would invest in commercial property (I assume using money borrowed from the scheme), and there were no promotional materials or advertising about the SSAS because it was being operated only for her family. 14 February 2025: Prudential asked Miss C for the scheme rules (as originally requested in October and December 2024), details of how she became aware of the SSAS and what information she’d been told about it. 4 March 2025: Miss C emailed Prudential the scheme rules (which I note the SSAS administrator had sent her brother on 11 February), confirming again it was her family SSAS. 13 March 2025: Recognising that the SSAS was an occupational scheme, Prudential additionally asked Miss C for a letter from “your employer”, confirming that they were a sponsoring employer of the scheme, the date from which she had been continuously in their employment and that scheme contributions had been paid in accordance with a payment schedule it also needed to see. It also asked Miss C for copies of her payslips for the last three months and proof that these had been paid into her bank account. 20 March 2025: In another phone call, Miss C’s brother told Prudential that Miss C was unable to send any further documents because Miss C had enrolled into the SSAS six months earlier but hadn’t made any contributions yet. Additionally Miss C’s family business (the SSAS’s sponsoring employer) didn’t pay her any income or employ her. At some point Miss C’s concerns began being treated as a complaint about a transfer delay. 21 March 2025: Prudential wrote to Miss C explaining it was concerned about the possibility of possible scam activity, and had identified “one or more” amber flags regarding her transfer. As a result she was required by legislation to obtain free pension scam guidance from the government-backed MoneyHelper service. The amber flag Prudential specifically

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mentioned was “there are high risk or unregulated investments included in the receiving scheme”. It gave her the information needed to make an appointment with MoneyHelper and said it wouldn’t be able to proceed with the transfer until this was complete. 1 April 2025: Prudential responded to the complaint I’ve mentioned above. Prudential apologised for its service, offering compensation of £100 said it would ensure she wasn’t financially disadvantaged by its delay. It also said the information Miss C had requested had been issued separately. 9 April 2025: Miss C responded to the complaint again requesting that her pension be transferred. 16 April 2025: Prudential reissued its letter of 21 March 2025 about the MoneyHelper appointment as it hadn’t received a reply. 23 April 2025: Prudential made a final offer to Miss C that it would still review the transfer process for financial loss should she complete the MoneyHelper appointment and proceed to transfer in the next 30 days. 7 May 2025: The complaint was referred to our service. As Miss C hasn’t had a MoneyHelper appointment the transfer hasn’t proceeded to date, and she hasn’t cashed Prudential’s cheque for £100. The basis of the complaint is that: - Other family members have been permitted to transfer their pensions (including Prudential ones) to the same SSAS without the same requirements. - The sponsoring employer is registered at Companies House. - The SSAS is approved by HMRC and its administrator is “Government approved”. - No funds can be withdrawn from the SSAS without prior approval of the five members and the administrator. - She has signed a “waiver for financial advice”. - If an appointment with a government body was required she should have been asked at the beginning. But in any event, it’s inconsistent with the above-cited government approval of the SSAS and its connected parties to need to have one, and she thinks it would just be repeating the same questions Prudential has already asked her. Miss C says that during the period of delay, she missed out on the opportunity to purchase two property investments within the SSAS, which had to be made from borrowing rather than her pension funds and have caused the SSAS unnecessary interest payments. She explains that the sponsoring employer is involved in refurbishing residential property and she will miss out on the profits from this. And she can’t provide evidence of the SSAS’s investments because they haven’t been made from her pension and the other members aren’t prepared to disclose them. Our Investigator didn’t think this complaint should be upheld because the above-mentioned Conditions for Transfers Regulations required Prudential to seek answers from Miss C to the questions it asked her about her employment, salary and pension contributions when she was transferring to an occupational pension scheme. She noted there were minor delays in the transfer process and some information could have been requested sooner, although from what she could see Prudential did send its requests to the correct postal address for Miss C and wasn’t responsible for any lack of receipt. However, she wasn’t persuaded that any delays here have made a difference because ultimately Miss C wasn’t prepared to or couldn’t answer Prudential’s questions. That in turn caused the amber flag to be triggered. Whether this was for the stated reason of

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high risk/unregulated investments being included in the SSAS or a lack of an employment link, the Investigator was satisfied this would have applied. So that resulted in a requirement under these Regulations for Miss C to attend the MoneyHelper appointment. As Miss C has still not done so, the Investigator couldn’t fairly say the transfer should have happened sooner, or should go ahead now unless Miss C does attend the appointment. Miss C didn’t agree with the Investigator. In addition to points made previously she said: - She didn’t receive Prudential’s October and December 2024 letters. But in any event it was inconsistent in asking for information at the outset and then saying (in November 2024) it would contact her if it needed anything. - The SSAS administrator would have already provided the necessary information at the outset such as the scheme rules. - By upholding the complaint, Prudential verified that she complied with the requests she received and it admits “we have been facing some issues which have impacted our ability to deal with enquiries in the manner and speed we normally aim for". - When Prudential initially refused the transfer, insufficient time (three days) and methods of contact were given for the SSAS administrator / Miss C to address this. - “Prudential has been informed from the start that this SSAS is a family Pension Fund. It is common sense I would discuss the ins and outs of the SSAS with my family members.” - Prudential’s questions about her employer (which I understand to mean her day job, outside the family business) were irrelevant. - The scheme can only invest in commercial property – which she stated was the objective – and this isn’t a high risk investment. Prudential is using the fact that it can “legally invest in a wide range of assets” as a technicality. As the Investigator wasn’t persuaded to change her opinion, the complaint was passed to me for a 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. What Miss C is asking to do in this case is to exercise her statutory right to transfer from the Prudential personal pension, meaning a right given to her in UK law. Part 4ZA, Chapter 1 of the Pension Schemes Act 1993 sets out this right at Section 95. It says that a member of a personal pension scheme may make an application to use the value of their personal pension to acquire transfer credits under an occupational pension scheme (such as a SSAS) which satisfies prescribed requirements. Those requirements in law (which applied at the time of Miss C’s transfer request and are unchanged) are set out in the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021. I’ll refer to them in this decision as “the Regulations”. They’re supported by related guidance from The Pensions Regulator (TPR)1. The reason the Regulations and supporting guidance had been introduced is that unsuspecting consumers were being taken advantage of in investment scams. Often this was by third parties (not necessarily companies, or people holding themselves out as advisers) who were involved in administering or acting as trustees of the receiving scheme. The fact that many of these receiving schemes were subject to regulation (either by the Financial Conduct Authority, or TPR in Miss C’s case) didn’t remove the risk of individuals 1 https://webarchive.nationalarchives.gov.uk/ukgwa/20211113164542/https:/www.thepensionsregulat or.gov.uk/en/pension-scams/dealing-with-transfer-requests

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being encouraged to make investments that were not in their best interests and in the worst cases could lead to catastrophic losses of pension funds and punitive tax charges. I note that the evidence Miss C has supplied of an email from her brother to the SSAS administrator was in response to a message from that administrator in January 2022 explaining that these new Regulations had come into effect on 30 November 2021. My understanding is that Miss C was introduced to the idea of investing in the family SSAS by her brother. Therefore I don’t think the fact that Prudential would ask questions about the transfer should reasonably have come as a surprise to either of them. Indeed, Miss C’s brother has commented that one of his own pension providers also required information from him, albeit later permitting the transfer to take place. That doesn’t necessarily mean Prudential has done anything wrong in not permitting Miss C’s transfer. I don’t know what answers Miss C’s brother gave to his provider’s questions and/or if they perhaps overlooked an issue that Prudential may reasonably (and consistently with the law) have identified in Miss C’s case. Where the First Condition in the Regulations (a transfer to a public service, Master Trust or collective money purchase scheme) doesn’t apply – as is the case here – the Regulations set out a set of red and amber flags which it’s necessary for the transferring scheme to assess in order for the Second Condition, allowing a transfer, to apply. The criteria are that no red flags (regulation 8(4-5)) can apply. Or if an amber flag (regulation 9(2-5)) applies, the member must be referred to MoneyHelper and confirm they have received appropriate guidance before transferring. Prudential has concluded that one (or more) amber flags apply. It told Miss C that the MoneyHelper appointment was necessitated by high risk or unregulated investments being ‘included’ in Miss C’s pension scheme. And it’s also told our service that in any case, a separate amber flag for Miss C being unable to evidence an employment link to the SSAS would apply. I’ll consider each of these in turn. Amber flag 3: High risk or unregulated investments I should say at this point that it isn’t unusual for a SSAS to purchase UK commercial property. At one point Miss C has said this is the only thing the SSAS is allowed to invest in. But that’s plainly not the case – section 5 of the scheme rules doesn’t just restrict investments to UK commercial property (with no residential element), but also insured policies, unit trusts or Open Ended Investment Companies, lending to other entities, borrowing from other entities, or stocks and shares. The risk of a scam could be present to a lesser or greater extent in any of these investments. An investment in directly-held property (whether commercial or residential) also isn’t regulated by the FCA, which would trigger the ‘unregulated investments’ part of this flag. And investment in single (or a few) properties rather than a collective investment fund which spreads the risk across a wider range of properties (and would as a result be regulated) tends to increase the risk by any conventional view. But in any event, from the explanations given it’s not clear to me that the SSAS has actually invested in, or exclusively in, commercial property. Miss C’s arguments have referred to the SSAS lending money to the sponsoring employer for it to purchase and then develop properties for a residential purpose. The nature of the sponsoring employer’s business at Companies House is “Buying and selling of own real estate”. I expect that this structure has been employed as a SSAS is not permitted to directly hold residential (as opposed to commercial) property. And it isn’t particularly unusual for the SSAS to lend money to the sponsoring employer either. But this hardly reduces the potential risk to which Miss C is

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exposed. Instead of her SSAS having the security of a bricks and mortar property it’s dependent on the sponsoring employer – a trading business – repaying the money lent to it from her pension funds. Not all companies trade profitably and the only reasonable view Prudential is able to take when scrutinising Miss C’s transfer request is that there are high risks involved here in making investments, via loans to the sponsoring employer, that are ultimately unregulated. In the past many investment scams have involved a pension scheme’s money being paid to a limited company to develop property. That’s essentially a key reason why this amber flag for unregulated or high risk investments exists. I’m not making a judgement that this is what is happening in Miss C’s case. But her being, at times, reluctant to disclose what investments the SSAS was already making would hardly dispel the reasonably grounds Prudential had to believe that this amber flag applied. If Miss C was genuinely a member of the SSAS (which is a separate concern I’ll address below) she would have every right to access this information, and Prudential had every right to ask for it in fulfilment of her statutory transfer request. Amber flag 1: Being unable to evidence an employment link Miss C’s somewhat distant connection to the SSAS shares more of the hallmarks of an investment scam. The current Regulations came into being because people had been encouraged to participate in non-genuine employment arrangements in order to join a SSAS which then facilitated an unregulated investment that wasn’t in their best interests. The FCA had been particularly concerned about SSAS transfers because it doesn’t regulate SSAS and this service has seen many complaints about SSAS scams. (A SSAS administrator isn’t “government approved”, to use Miss C’s terms, in the same way that a SIPP administrator is required to be approved by the FCA). Again, I’m not making a judgement that Miss C is being affected by a scam, but Prudential’s actions need to be judged in that light. There’s no provision in the Regulations themselves or the supporting guidance for Prudential to place its trust entirely on the trustees or administrators of the receiving scheme. That would remove the important safeguard of it carrying out adequate due diligence of its own. So, any disclaimers Miss C says she’s completed for the SSAS administrator won’t be relevant here. The questions Prudential asked Miss C were those set out in the Regulations and guidance as being necessary to demonstrate an employment link to the SSAS she was asking to transfer to. And the necessary criteria for there to be an employment link are set out at Regulation 11(1): “(1) There is an employment link between the member and the receiving scheme where the trustees or managers of the transferring scheme decide that— (a) the member's employer is a sponsoring employer of the receiving scheme; (b) the member is in employment with the sponsoring employer and this employment has lasted for a continuous period of at least 3 months ending with the date the request to make the transfer was received by the trustees or managers of the transferring scheme; (c) the member's employment during the period of 3 months ending with the date the request to make the transfer was received by the trustees or managers of the transferring scheme ("the relevant employment period") has met the minimum salary requirement specified in paragraph (7); and (d) contributions to the receiving scheme have been paid by, or on behalf of, the sponsoring employer, or by, or on behalf of, both the sponsoring employer and the member, during the relevant employment period.” Miss C’s answers indicate that:

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(a) Whilst a property development company is named as the sponsoring employer of the SSAS, she says she isn’t employed by that company; (b) As a result, she can’t evidence continuous employment for at least three months up to the date of the transfer request; (c) For similar reasons, there appears to be no salary whatsoever; and (d) There are no pension contributions being paid. Because there seems to be no significance to the sponsoring employer being mentioned in (a) unless it actually employs Miss C, it doesn’t appear that any of the criteria for an employment link have been satisfied. That is, at the very least, the very definition of amber flag 1 in TPR’s guidance (where the “member” hasn’t been able to provide “all” of the evidence requested – here she has been able to provide none). In fact, even to term Miss C a member of the SSAS would appear to contradict the scheme rules, which define a member as an employee of the sponsoring employer and state at section 6.5: “6.5 Only employees of the Principal Employer may be Members of the scheme…” Miss C’s situation is therefore one where I’ve actually encountered other pension providers apply red flag 1 in TPR’s guidance (“The member has failed to provide the required information”). The difference being that a red flag would result in the total refusal of the transfer request before even needing to attend a MoneyHelper appointment. And it’s because amber flag 1 seems to have been intended to be used where the applicant hadn’t “fully” demonstrated the employment link, rather than not at all. Given that Miss C hasn’t in any case agreed to attend the MoneyHelper appointment which was necessitated by either amber flag 1 or 3, this ends up causing red flag 2 in any event: “The member has not provided evidence of receiving MoneyHelper guidance.” Therefore, however Prudential might reasonably approach its assessment of Miss C’s statutory transfer request, it has resulted in the correct conclusion that it should decline it. And should the situation alter in future with Miss C being prepared to attend the MoneyHelper appointment but her relationship with the sponsoring employer not changing, I would suggest Prudential gives further consideration to red flag 1. Other considerations • Assumption that the SSAS administrator gave Prudential the necessary information: The transfer was requested on a paperless online system (Origo Options). As this was a SSAS transfer the administrator would reasonably have been aware that Prudential would ask Miss C further questions about it. • Miss C not receiving Prudential’s letters: these were posted to her correct address, and particularly as more than one was sent I think it’s highly likely these were received. • Prudential requesting information and then saying it would ask Miss C if it needed anything: this is no excuse for Miss C not to act reasonably and respond to Prudential’s original information request. It’s also inconsistent with the claim of non-receipt of letters. I can see that some answers were provided by Miss C’s brother to the SSAS administrator when these should have been sent (by Miss C) to Prudential directly. • Insufficient time and methods of contact being provided: Prudential waited a considerable time for a response to its enquiries before halting the transfer. I’m satisfied it was reasonable to expect a reply in writing given the range of information required. • Delay in asking Miss C the employment questions: This was triggered by Prudential realising the receiving scheme was occupational in nature and would likely have been alleviated by Miss C more promptly answering its original questions.

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• Prudential wrongly referring to “your employer”: The onus was on Miss C or those assisting her to recognise that she was transferring to an occupational scheme which had an employer, and it was to this employer Prudential was referring. • Delay in informing Miss C about the MoneyHelper appointment: It’s reasonable for Prudential to decide how to proceed having first assessed the information Miss C gave. • Prudential’s admission of delay: Evidently, Prudential thought it was appropriate to apologise for some processing delays in its operations, but I’m not persuaded that this had anything but a minimal impact on Miss C’s overall transfer experience or would reasonably contribute to a financial loss should the transfer ever proceed in the future. • Prudential’s offer of £100: Our Investigator didn’t say this now needed to be paid to Miss C, and nor do I consider this is warranted by the negligible impact of Prudential’s administration on the overall processing timescale. The cheque will by now have expired but Miss C may ask Prudential if it is prepared to reissue it. My final decision In summary, I think Prudential had had good reason to be concerned about several amber flags and potentially even a red flag affecting this transfer. As Miss C wasn’t prepared even to attend a MoneyHelper appointment, which is a legal requirement on discovery of an amber flag, it has made no difference to the overall outcome which is that her transfer request had to be refused. I’m satisfied that Prudential has treated Miss C fairly and reasonably in the way it has approached her transfer request, both given the regulations to which it is subject and the likely benefit policyholders in her position, in general, would gain from a MoneyHelper appointment. Therefore I do not uphold her complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss C to accept or reject my decision before 6 April 2026. Gideon Moore Ombudsman

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