Hornbuckle Mitchell Sipp · CAS-38681-W2H9

CAS-38681-W2H9

Ombudsman’s Determination Applicant Mr N

Scheme Hornbuckle Mitchell SIPP (the SIPP)

Respondent Embark Services Limited (Embark)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons CAS-38681-W2H9 Detailed Determination Material facts

Embark is the administrator of Mr N’s SIPP. St James’ Place (SJP) is Mr N’s financial adviser (IFA).

On 9 April 2019, Mr N emailed Embark requesting the withdrawal of £20,000 from his SIPP. Mr N included a completed Investment Sale Form (the Sale Form) and a completed Income Instruction Form (the Income Form) with the email. On the Income Form, Mr N indicated that the money withdrawn should be paid into the bank account Embark had on record for him (the original account).

On 11 April 2019, there were email exchanges between Embark and Mr N concerning him signing a risk warning letter and the payment of the £20,000. On 18 April 2019, Embark emailed Mr N and confirmed that a “gross income payment of £20,000 (subject to the relevant tax) will be paid to your nominated bank account by close of business on 29/04/2019.”

On a date after 11 April 2019, Mr N’s email account was infiltrated by the fraudster. As a result, the following exchanges, detailed in paragraphs 7 to 12 and paragraphs 14 and 15 below, which Embark believed were with Mr N, were in fact with the fraudster.

On 23 April 2019, the fraudster, using Mr N’s email account, emailed Embark and said:

“I just got a notification from my bank concerning my account.

Unfortunately there is a little problem with my bank account and i [sic] will not be able to receive any payment with the account until further notice.

In respect of that, i will like to change my nominated bank account (for the incoming payment) to my alternative bank account.

Kindly advise on how to go about it or can i send the bank details to you?”

1 This is detailed in the Appendix. 2 CAS-38681-W2H9

“I can get the bank statement online but i won’t be able to have it certified because i am currently out of town.

If it must be certified, then the statement will not be ready till Sunday or Monday.

Will the online statement work (without certifying it) or can the payment be cancelled?”

“Thank you for submitting the Income and Investment Sale forms in order to encash £20,000 from the [SJP] investment held under the above scheme.

I can confirm the Investment Sale form has been countersigned by [Embark] and forwarded on to [SJP] for processing. We will issue further confirmation once the investment sale funds have been received into the scheme bank account and we have processed your income payment.”

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Mr N’s position

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Conclusions

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“Other than as a direct result of our negligence, wilful default or fraud, neither we nor the independent trustee accept any liability or obligation for any or all losses, costs, actions, proceedings, claims and demands arising directly or indirectly that are incurred by, or brought or made against us or the independent trustee.”

For a claim of negligence against Embark to be successful certain elements need to be established. The first element is whether Embark owed a duty of care to Mr N. In establishing whether a duty of care exists, it was confirmed in Robinson v Chief Constable of West Yorkshire Police (Rev 1) [2018] UKSC 4 that the correct approach is to consider whether there is already established precedent for a duty of care to apply in a particular situation. If there is, that precedent should be followed. If there is not, the correct approach is to consider the closest analogies in the existing law and to weigh up the reasons for and against imposing liability, in order to decide whether the existence of a duty of care would be just and reasonable.

Taking the relationship between Embark and Mr N at a general level, Embark undertook as a professional pension scheme administrator to carry out administration services for Mr N, upon which Mr N relied. It was held in Hedley Byrne & Co. Ltd v Heller & Partners Ltd. [1964] AC 465 that where a party possessing a special skill undertakes to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. So, I consider that Embark owed Mr N a duty of care. However, to the extent that the relationship between Embark and Mr N could be regarded as a novel one not previously considered by the courts, following Robinson, I will consider each of the foundations upon which a duty of care is based, which were set out in Caparo Industries v Dickman [1990] 1 All ER 568:

2 Similarly, I note that Clause 7.3 of the Ts&Cs also looks to allow Embark to rely on an instruction “…which purports to have been given by [the member] without further enquiry…” and to accept that instruction “without the need for further investigation as to the … identity of the person giving it … provided that the instructions have been received without negligence”. Again, it is clear that this does not provide protection to Embark if there has been negligence. 8 CAS-38681-W2H9

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Directions

Within 28 days of the date of this Determination, Embark shall

Pay Mr N £1,000 for the serious distress and inconvenience this situation has caused him.

Dominic Harris

Pensions Ombudsman 29 September 2023

Appendix The requirement for an original bank statement (dated within one month) and a certified copy of a bank statement (dated within one month).

“Printed bank statements showing the name and address the account is held in will be acceptable. For a UK resident, copy documents must be certified with an original signature from one of the following: Chartered Accountant, Bank Official, Building Society Official, Barrister, Civil Servant, Commissioner 12 CAS-38681-W2H9 of Oaths, Financial Adviser (regulated by the Financial Conduct Authority), General Practitioner / Consultant or Medical Professional, Justice of Peace, Member of Parliament, Officer of the Armed Services, Police or Customs officer, Postmaster or Solicitor. Certification by retired professionals will not be accepted.

The certification wording should include “This is a true copy of the original document that I have seen”. Each certified document should be stamped by the certifying body (where applicable), and must state the name, address and telephone number of the certifier as well as their profession, signature and date. The date of the certification must be within the past 12 months.”

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