Mr D and his wife each held a Sipp provided and administrated by Curtis Bank, with Mrs D’s Sipp also containing a share in a commercial property.
In 2014, Mr D and Mrs D started divorce proceedings, with Mrs D’s solicitor requesting a valuation of her Sipp on 5 November 2014 in anticipation of a pension sharing order.
Miscalculation
On 18 November 2014, Curtis Banks provided a valuation of £4,076,91 ($5,292, €4,646) for her Sipp.
However, the company cautioned that “this value is not guaranteed to remain the same, as the value of our clients’ Sipps are not usually worked out until the day of transfer, this is due to fluctuations in the markets and any applicable fees to be taken into account”.
In reality, the Sipp had accrued annual fees that had not been paid since 2010 and wiped out the value of Mrs D’s account.
The fees amounted to £5,136.25.
On 18 December 2014, the court awarded Mr D 100% of the value of Mrs D’s Sipp.
However, the unpaid fees and a £600 charge for administering the pension sharing order left Mr D with a debt of £1,358.81.
Curtis Banks’ response
The Sipp provider accepted that it should have checked for any outstanding, accrued fees before providing the indicative value.
But added that the figure quoted was not guaranteed and that the fees incurred remain rightfully owed.
Ombudsman involvement
After Mr D contacted the Pensions Ombudsman, Curtis Banks made a settlement offer to Mr D in March 2017.
It included writing off the fees applied to Mrs D’s Sipp, waiving fees applied after 2015 when the pension sharing order should have been processed and transferring the commercial property into Mr D’s Sipp at no cost.
Curtis Banks also confirmed it would waive the pension sharing order implementation fee and that it would stand the cost of preparing the deed of assignment and declaration of trust that would have needed to be paid by Mr D.
An Ombudsman adjudicator contacted the Sipp provider to get confirmation of what the monetary value of Mr D’s Sipp would have been had the pension sharing order been implement in 2015.
The intention was to compare it with the situation Curtis Banks’ offer would leave Mr D in.
Curtis Banks did not respond, despite several reminders.
Adjudicators opinion
Curtis Banks was found to have acted in maladministration by failing to check for outstanding fees before providing a valuation, the adjudicator said.
The firm also ought to have been in a position to identify the outstanding fees and it was not unreasonable to assume there would be some form of arrears flag on its system.
Although the valuation came with a disclaimer, the adjudicator found that “a realistic reading of the disclaimer would not bring about an awareness that substantial arrears were outstanding”.
Additionally, the word “fluctuations” suggests modest changes in value, rather than an application of four years’ worth of arrears resulting in a negative net asset value.
Curtis Banks’ maladministration has resulted in a negligent misstatement, upon which Mr D and the courts acted in good faith. The adjudicator said, “it is doubtful that the intention of the court was to award Mr D a debt”.
