UK Pensions Briefing | New Pensions Ombudsman streamlined decision-making process | January 2025

Overview

The Pensions Ombudsman has rolled out some significant changes to its decision-making process following a root and branch review of its operating model. The result should be faster decisions, with ill-conceived complaints turned away much earlier in the process. However it will also impact trustees' and employers' processes too. The Ombudsman is expecting greater proactivity to settle complaints, and faster responses when an investigation starts.

• The problem to be solved
• The changes in a nutshell
• The Operating Model Review
• Expedited process
• Expedited determinations
• Lead cases
• Guidance
• Action points
• The future

The problem to be solved

The Pensions Ombudsman's role in dealing with complaints or disputes about workplace or personal pension schemes may be familiar to you. The Ombudsman offers an impartial and free dispute resolution service to members.

However, in the summer of 2024, the Ombudsman, Dominic Harris, recognised in a blog that the organisation had reached the point "where the demand for [its] services [was] outstripping… capacity to resolve cases for complainants and respondents in a timely fashion." The service has now carried out an in-depth review of its operating model, to explore potential options for improved efficiency across the whole customer offering.

This briefing looks at the changes being introduced to tackle the historic backlog of cases and reduce the waiting times for new complaints.

The changes in a nutshell

To date, the normal complaints process has been:

• Review of the application followed by requests for more information if required.
• Investigation by a caseworker examining the facts of the case, where again more information may be sought.
• Appointment of an adjudicator, at which point an informal resolution may be reached by agreement.
• Where a party does not accept the adjudicator's decision, the complaint goes to the Ombudsman who will issue a binding determination.

The key changes piloted and now being rolled out by the Ombudsman are to:

• Stop the previous practice of allowing applicants to by pass any relevant internal dispute resolution procedure.
• Exercise the Ombudsman's power not to accept a complaint e.g. if it falls more accurately under another regime such as the Information Commissioner's data privacy jurisdiction.
• Adopt new expedited decision-making processes.
• Change the case management approach to shorten deadlines.
• Adopt a lead case approach where there are multiple complaints about the same thing.

The Operating Model Review

In May 2024, a blog by Robert Loughlin, the Chief Operating Officer at the Ombudsman, outlined an ongoing operating model review. The review was exploring all potential options for improved efficiency across all areas of the service from the way complaints are submitted to the way decisions are made and communicated. The goal was to provide earlier resolution of complaints.

The review identified three areas to be prioritised:

• Resolution Team changes - tightening up the conditions to be satisfied before a complaint is investigated and requiring complainants to demonstrate that they have exhausted the respondent's formal complaints process (such as the scheme's Internal Dispute Resolution Procedure).
• Expedited determinations - extending the use of short-form decisions and determinations for appropriate cases at all stages of the process, reducing the number of handovers between internal teams.
• Thresholds for accepting complaints - exploring whether there are certain categories of complaints that are more appropriately dealt with by other organisations and whether a de minimis threshold should be applied in some circumstances.

Expedited process

The customer journey for complainants now looks quite different, with many more opportunities for a complaint to be resolved early without needing the full determination process.

Original process	New process
Validation	Validation and triage: Volunteer engagement - may lead to an agreement between the parties Consider whether to exercise power not to investigate further
Assessment (including triage, jurisdiction, case preparation)
Either: If matter appears resolvable, to early resolution team (includes volunteers, and may result in IDRP being followed) then on to adjudication if matter not resolved. Or Direct to adjudication	Either: To Resolution Team: Broker an agreement, issue a decision letter or follow expedited determination process (see below). Refer to assessment stage if (but only if) necessary. Or To assessment stage: Exclude if outside jurisdiction Issue decision letter or Follow expedited process Refer to adjudication only if necessary
Adjudication: adjudicator's opinion (informal agreement and report if matter settles, or opinion - ends process if accepted by all parties. Otherwise referred on)	Adjudication: independent formal investigation, adjudicator's opinion, short form opinion or determination. Ends process unless a party disagrees
To the Ombudsman for determination (may involve preliminary decision for more complex matters, or direct to formal Determination)

Expedited determinations

Expedited determinations will be used for pension complaints that are assessed as having an obvious outcome, such as:

• Where a scheme supplied an incorrect benefit statement, but it is clear no loss was caused by the error.
• Where a member is complaining that automatic fund switches in a lifestyling investment strategy cost them investment returns, but the default lifestyling arrangement was adequately communicated.
• Where a member wants a scheme to honour a cash equivalent transfer value when the member was responsible for not meeting the statutory time limits.

In these sorts of situations there will be an initial decision from a caseworker, which will be sent to all parties. If any party disagrees, they can ask for the matter to be referred to the Ombudsman, who will issue a final and binding determination if they agree with the caseworker's view. It means you can get a determination without going through the adjudication process.

The aim is to reduce duplication and provide shorter determinations similar to summary judgments used by the courts. In many cases, it should reduce the waiting time by as much as 18 months. Closing this cohort of cases more quickly will also allow the Ombudsman to focus its adjudication resource on the complex cases that require more in-depth investigation.

Following a pilot, the expedited decision-making process has been rolled out, and the Ombudsman has provided an example of a short form determination actually issued. As expedited determinations will not usually be published, the Ombudsman is exploring how best to share industry-wide learnings, for example though case studies or broader insight products.

Lead cases

The Ombudsman is now using a 'lead case' approach where it identifies an industry-wide issue, or a scheme-specific issue affecting multiple members. It will either:

• Take on a single case while the others remain in the scheme's own IDRP to be dealt with once the determination in the lead case has been delivered.
• Apply the same findings and directions from the lead case to all the linked cases already accepted by the Ombudsman's office.

Guidance

The Pensions Ombudsman's office has issued a helpful factsheet about the Resolution Team to explain what it is, how resolution specialists operate and how the process works.

Another factsheet, Complaining to the party/parties at fault, explains how to use a scheme's independent dispute resolution process before contacting the Ombudsman.

The How we investigate complaints factsheet sets out information on what happens when a complaint is received and the steps the Ombudsman takes.

Best practice on signposting access to the Ombudsman when dealing with a member complaint is covered by another factsheet which includes some ready-made wording to add to your responses.

Action points

• Tighten up complaints processes: the Ombudsman is likely to be more stringent on deadlines for responses and submissions, so make sure your administrators' service level agreements are fit for purpose and you have an efficient arrangement in place for dealing with complaints between trustee meetings.
• Flag opportunities to adopt a lead case approach: from a trustee or employer's viewpoint a lead case approach should considerably reduce the overall administrative burden so it is worth flagging to the Ombudsman as early as possible if you are dealing with complaints which would suit this approach.

The future

While the expedited process should make significant inroads into the Ombudsman's case backlog, it will take some time to address fully the current delays. The Ombudsman reported in a blog in September 2024 that the number of cases resolved to date using the piloted process had exceeded expectations but that there had been a 24 per cent rise in the number of new complaints. His update in December 2024 revised that figure to a 53 per cent increase.

Updates on the Operating Model Review will be provided on the Ombudsman's website over the coming months, and you can also subscribe for email updates.