Royal London Mutual Insurance Society, Limited · DRN-6264772

The complaint The estate of the late Mr P (who I simply refer to as ‘Mr P’ hereafter) complains that annuities Royal London Mutual Insurance Society, Limited (THE) (‘Royal London’) arranged for Mr P, with Provider J and Provider S, stopped after Mr P sadly passed away. The estate complains that Mr P’s widow, Mrs P, has been told she isn’t entitled to an annuity, or any of the monies that were used to purchase the annuities, after Mr P died. The estate feels that if Royal London had explained how the annuities operated in a manner that was understandable to Mr P, that Mrs P wouldn’t be in the situation she is now in. The estate complains that Royal London didn’t give correct advice and that it also told Mr P he couldn’t take the monies from his Royal London pension plans as a lump sum because of “money laundering”. What happened Mr P had two pension plans with Royal London, held under the same Registered Pension Scheme – the Royal London Personal Pension Scheme (No.3) – formerly the CIS Personal Pension Scheme. Mr P had phone discussions with Royal London about his pension plans in October 2019 and it was noted, amongst other things, during one of those calls that: • Royal London explained that Mr P could take pension benefits at any point going forward. • Mr P asked about a financial adviser confirmation form he had been sent. Mr P said he didn’t want a financial adviser as it would cost “an arm and a leg”. Mr P asked if he could take both of his Royal London policies as a lump sum. • Royal London explained to Mr P that if the value of his policies in the Scheme was over £30,000 and there were safeguarded benefits (which there were) that Mr P would need to get financial advice before he could take his Royal London pension policies as a single lump sum. It was noted, during a second call between Mr P and Royal London in October 2019, that: • Mr P had received a retirement pack and the pack said he could take his pension policies as a lump sum. Mr P said when he’d spoken to Royal London previously, and said he wanted to take a policy as a lump sum, he was told he had to have a financial adviser. Mr P asked Royal London to confirm if this was correct. • Royal London said that if the policies were part of the same Scheme, and the guarantees held within the Scheme exceeded £30,000, there was a requirement to take financial advice before taking the value of a policy as a single lump sum. • Royal London confirmed that Mr P had two policies within the same Scheme and the guarantees within the Scheme exceeded £30,000. • Royal London explained it couldn’t give Mr P any financial advice. • Mr P said he had made enquiries with a few financial advisers, but he would need to pay an adviser 2% or 3% of the value of both of his policies for advice.

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And it was noted during a third call between Mr P and Royal London in October 2019 that: • Mr P asked whether the financial adviser confirmation form he had been sent needed completed by a financial adviser for every option in the paperwork he had received. • Royal London confirmed that the form wouldn’t need to be completed with the option for taking the pension benefits as an annuity (or if taking a 25% tax-free cash lump sum and using the residual monies to purchase an annuity). There was further contact between Mr P and Royal London in November 2019. Following this, Royal London wrote to Mr P on 28 November 2019 and enclosed an application pack, an annuity illustration, a Key Features Document (which outlined aims, commitments and risk factors associated with the annuity), a Keyfacts about our Services and Costs document, a personalised quote summary and an Annuity Features Document (which detailed the key information about the annuity quotation provided). The following appears at the start of the “About our Services and Costs document”: Amongst other things, it was noted in the other documentation Royal London sent to Mr P on 28 November 2019 that: • Mr P’s chosen annuity quotation was for an annuity that, amongst other things, was payable monthly in advance, with no value protection, no guarantee period and no dependant’s pension. • The service Mr P had received from Royal London was a 'Non Advised' service and during this process it had acted on Mr P’s explicit request only. • Mr P had neither sought nor received any advice from Royal London.

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• Royal London could not be sure that the transaction was suitable for Mr P’s overall circumstances and, therefore, the decision was his responsibility. • If Mr P wished to change any of the annuity features from the quotation, a new quotation would be generated using annuity rates on the date of the revised quotation. Mr P could call Royal London if he wished to do this. • “If you feel you require advice please get in touch – we can help you find a financial adviser”. [bold original emphasis] • “Before your annuity starts it may be possible to change the features and benefits that you have selected and receive a revised quotation. Once you have bought your annuity, you will not be able to change your mind or go to another life assurance company”. [bold original emphasis] We’ve been provided with an application form for Mr P’s Provider S annuity, which Mr P signed on 4 December 2019. It’s noted, amongst other things, in the application form that: • The adviser was Royal London Annuity Bureau. • The type of sale was “Non-Advised”. • The approximate fund value to be paid to Provider S was a little over £70,000. • The annuity would be paid monthly in advance, there would be no guarantee period and there would be no dependant’s income paid after Mr P’s death. • The contents of the form were, to the best of Mr P’s knowledge, “true and complete”. The application form for Mr P’s Provider S annuity was returned to Royal London and Royal London then sent it on to Provider S on 17 December 2019. It was explained in a covering letter Royal London sent to Provider S that there was a Guaranteed Annuity Rate (‘GAR’) attached to the monies being used to purchase the annuity, and the minimum guaranteed income stated must be maintained under all circumstances. It was explained that for the £70,886.96 being used to purchase the annuity the GAR was £3,633.84. We’ve been provided with an application form for Mr P’s Provider J annuity that Mr P signed on 4 December 2019. It’s noted, amongst other things, in the application form that: • The financial intermediary was Royal London Annuity Bureau. • A box was ticked to confirm that no advice had been provided. • The approximate fund value to be paid to Provider J was a little under £27,000. • Mr P wanted to take tax-free cash of £5,181 and to use the residual monies to secure an annuity. • A reference for the applicable Provider J annuity quotation was given (which I’ll refer to as ‘Quotation J’). • The contents of the form were, to the best of Mr P’s knowledge, “true and accurate”. • Mr P authorised the payment of tax-free cash and for his residual monies to be paid to Provider J for the purposes of it providing him with an annuity on the basis set out in Quotation J. We’ve been provided with a copy of Quotation J. This set out that the pension fund used to purchase the annuity was £21,600.46 and this would provide an annual income of £1,052.52 throughout Mr P’s lifetime. There was no “value protection” and the dependant’s income was 0% and £0 – so, there would be no dependant’s income to be paid following Mr P’s death. And the annuity doesn’t have a surrender value at any time. Mr P also completed a Royal London enhanced quotation form. The form contained details of Mr P’s medical conditions, the medication he was taking and his doctor. It was noted the form contained information that would be shared with providers who included Provider J and Provider S. The form also noted the adviser as being the Royal London Annuity Bureau and

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that the basis of the sale was “Non-Advised – No Advice”. The selected annuity options in the form were monthly level payments in advance, no guarantee and 0% dependant’s benefit on death. Mr P signed the form on 13 December 2019 and it was received by Royal London on 17 December 2019. The application form for Mr P’s Provider J annuity was returned to Royal London and Royal London then sent it on to Provider J on 17 December 2019. It was explained in a covering letter Royal London sent to Provider J that there was a GAR attached to the monies being used to purchase the annuity, and the minimum guaranteed income stated must be maintained under all circumstances. It was explained that for the £21,600.46 being used to purchase the annuity the GAR was £1,052.52. Royal London wrote to Mr P on 2 January 2020 and 9 January 2020 to confirm that tax-free cash payments of £5,181 and £14,440.65 respectively had been made to him. Royal London wrote to Mr P separately on 9 January 2020 and said that the details of his Provider J annuity were set out in a document it was enclosing. It was noted, amongst other things, in the document that: • The policy was in Mr P’s name. • The pension fund used to purchase the annuity was £21,600.46 and this would provide an annual income of £1,052.52 throughout Mr P’s lifetime. • There was no “value protection” and the dependant’s income was 0% and £0, so there would be no dependant’s income to be paid following Mr P’s death. Royal London wrote to Mr P on 31 January 2020 and noted that the details of his Provider S annuity were set out in a document it was enclosing. It was noted, amongst other things, in that document that: • The policy was in Mr P’s name. • The pension fund used to purchase the annuity was £70,886.96 and this would provide an annual income of £3,727.32 throughout Mr P’s lifetime. • The final income payment from the annuity would be the last monthly income date before Mr P died. Unhappy that payments from the annuity stopped after Mr P’s death, and that no monies were returned, the estate of Mr P complained to Royal London. Royal London responded to the complaint in September 2025 and noted, amongst other things, that: • Mr P’s annuity purchase was a non-advised service. • Mr P was provided with correct information and everything possible to ensure he made an informed decision. • Retirement option packs were issued for Mr P’s pension policies in October 2019. These packs detailed all options available to Mr P upon retirement. • Mr P initially explored claiming his policies as lump sums. However, due to the combined value of the policies being over £30,000, and there being valuable guarantees attached, Mr P had to obtain financial advice if he wanted to access the monies as a lump sum. Mr P didn’t want to obtain financial advice and he subsequently contacted Royal London’s Annuity Bureau on 29 October 2019 and pursued an annuity claim instead. • Royal London’s Annuity Bureau doesn’t offer advice and wouldn’t have given Mr P advice on which option he should take at retirement.

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• Mr P made the decision about how to proceed himself and all the required risks, regulatory scripts and checks were carried out to ensure his decision was an informed one. • Mr P decided he wanted to take 25% tax-free cash and for the annuities to be set up on a single life basis and with no guarantee period. • Mr P submitted application forms for his annuities which were acted on by Royal London once received. • Following Provider J and Provider S arranging the annuities, Mr P would have received a confirmation document for his annuities and he would have been given a 30-day cooling off period to change his mind. Dissatisfied with Royal London’s response, the estate of Mr P asked us to review the complaint. The estate of Mr P has said, amongst other things, that: • Policies are difficult to understand. Mr and Mrs P had expected that the policies would operate like “a normal pension the same as [Mr P’s] works pension” and that if anything happened to Mr P then Mrs P would get the pension. • Roughly a year before the complaint was referred to this Service, Mr P had spoken to a family member about the policies and had realised that “they were not what he thought they were”. As such, he had called Royal London and asked for Mrs P’s name to be added to the policies. But Mr P was told that it was too late and this wouldn’t be possible. • If Royal London had explained the policies in a manner that was understandable to Mr and Mrs P, then Mrs P wouldn’t be in the situation she is now in. • It’s not right for an insurance company to be able to claim monies when there is a surviving spouse. • It has since discovered that individuals can take their whole pension pot from the age of 55 up until the age of 75, and it wants to know why Royal London stated Mr P couldn’t do this because of money laundering. • Royal London didn’t give correct advice. • Royal London should either pay Mrs P what is left in Mr P’s pension pot as a lump sum, or else pay Mrs P the monthly payments that Mr P was previously receiving. One of our investigators reviewed the complaint and concluded the complaint shouldn’t be upheld. Briefly, the investigator said that Mr P had to pay for financial advice if he wanted to take his policies in full as lump sum payments and it doesn’t appear he wanted to pay for advice. Further, that Royal London didn’t give Mr P advice and that the annuities that were set up were arranged on the basis Mr P had requested. The estate of Mr P wasn’t in agreement with the investigator’s findings and noted, amongst other things, that Royal London has a considerable amount of money belonging to Mr and Mrs P and it would like to get this back for Mrs P. Royal London has noted, amongst other things that: • Section 48 of the Pension Schemes Act 2015 introduced the requirement that members with safeguarded benefits (including a GAR) must take appropriate independent advice before taking an Uncrystallised Funds Pension Lump Sum (‘UFPLS’). • Regulation 5 of the Pensions Schemes Act 2015 (Transitional Provisions and Appropriate independent Advice) Regulations 2015, restricts this requirement so that

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it only applies where the total value of the member’s subsisting rights in respect of safeguarded benefits under the Scheme is £30,000 or less. • A customer may have more than one policy number but provided they are both personal pensions then they are held under the same Registered Pension Scheme – in Mr P’s case the Royal London Personal Pension Scheme (No.3) – formerly the CIS Personal Pension Scheme. • When deciding whether the exception to Section 48 applies the value of all benefits under the Scheme which are subject to the GAR must be aggregated. And the Pension Scheme Tax Reference number for both of Mr P’s policies under the same Scheme was the same. 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. When considering what’s fair and reasonable in the circumstances, I need to take account of relevant law and regulations, regulator’s rules, guidance and standards, codes of practice and, where appropriate, what I consider to have been good industry practice at the relevant time. The parties to this complaint have provided detailed submissions to support their position and I’m grateful to them for doing so. I’ve considered these submissions in their entirety. However, I trust that they won’t take the fact that my final decision focuses on what I consider to be the central issues as a discourtesy. To be clear, the purpose of this decision isn’t to comment on every individual point or question the parties have made, rather it’s to set out my findings and reasons for reaching them. Having reviewed all of the evidence, I’ve reached the same conclusion as our investigator and for broadly the same reasons. Where the evidence is incomplete, inconclusive, or contradictory, I reach my decision on the balance of probabilities – in other words, what I consider is more likely than not to have happened in light of the available evidence and the wider circumstances. Royal London telling Mr P he couldn’t take the monies from his pension plans as lump sums because of “money laundering” I’m not persuaded that Royal London told Mr P he couldn’t take the monies from his pension plans as a lump sum due to money laundering. Rather, I think Royal London explained to Mr P that he couldn’t take the monies from his pension plans as a lump sum – which would have been in the form of an UFPLS – without Mr P first receiving financial advice about this. I’m satisfied this was explained to Mr P by Royal London in the October 2019 phone discussions I’ve referenced towards the start of this decision. Section 48(1) of the Pension Schemes Act 2015 says: “Where a member of a pension scheme has subsisting rights in respect of any safeguarded benefits… the trustees or managers must check that the member or survivor has received appropriate independent advice before - (a) converting any of the benefits into different benefits that are flexible benefits under the scheme; (b) making a transfer payment in respect of any of the benefits with a view to acquiring a right or entitlement to flexible benefits for the member or survivor under another pension scheme;

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(c) paying a lump sum that would be an uncrystallised funds pension lump sum in respect of any of the benefits.” Part 5 of the Transitional Provisions and Appropriate Independent Advice Regulations says: “The trustees or managers are not required to carry out the check in section 48(1) of the Act if the total value of the member’s or survivor’s subsisting rights in respect of safeguarded benefits under the pension scheme is £30,000 or less on the valuation date.” So, the check applies if Mr P wanted to access his pension flexibly – in other words by doing anything other than drawing benefits as a 25% tax-free cash sum and fixed annual income (an annuity). Or else using the entire pension fund to secure a fixed annual income. For the definition of a pension scheme itself, the 2015 Act refers back to section 1 of The Pension Schemes Act 1993: ““personal pension scheme” means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect so as to provide benefits, in the form of pensions or otherwise, payable on death or retirement to or in respect of employed earners who have made arrangements with the trustees or managers of the scheme for them to become members of it;” And the glossary to the Financial Conduct Authority’s current rulebook also states that a personal pension scheme is “comprised in one or more instruments or agreements”. So, I think these references do suggest that it’s possible for a personal pension scheme to consist of more than one plan or policy. The legislation doesn’t explain when one plan could be regarded as distinctly separate from another. So, I can understand why Royal London has interpreted the legislation in the way it has. Further, to the extent that there is any ambiguity in the regulations as to when two “instruments or agreements” are part of the same scheme, in my view regard should then be had to the intention of the regulations. Here the intention was to protect consumers who might be making a mistake in losing valuable benefits, for example from a GAR. The government has made an exception if the benefits are less than £30,000, which effectively recognises that it might not be cost-effective to have to take advice when funds are small. Mr P did have guaranteed annuity benefits worth more than £30,000, which were held with Royal London. And Royal London believes it’s acting in accordance with the legislation by valuing all the benefits in the same Royal London Scheme together. It’s also the case that legislation does exist in other situations (for instance, where funds of less than £10,000 can be taken as ‘small pots’) where the test is expressly applied at an ‘arrangement’ level, not a ‘scheme’ level. I think this does show that the government had the option, when drafting the legislation on safeguarded benefits, to apply this at an ‘arrangement’ level – but chose not to do so. The Department for Work and Pensions (‘DWP’) issued guidance in January 2016 covering another scenario where safeguarded benefits applied. This was where a consumer had been promised a guaranteed occupational pension – but had also made additional voluntary contributions (‘AVCs’) to build up a further ‘pot’ alongside the occupational pension, to which (for instance) a GAR might apply. The DWP made clear that even though the consumer had complete freedom to transfer the AVC fund elsewhere without having to do the same with

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the occupational pension, they were both part of the same ‘scheme’. So, they had to be valued together to establish whether financial advice was required. Unfortunately, a line had to be drawn somewhere. And naturally there will be some people who feel that they’ve been put on the wrong side of that line. Such as Mr P, who might have wanted to take the monies from his pension plans as a single lump sum (or two single lump sums) without having to pay for advice. However, this Service wasn’t involved in drafting the legislation around safeguarded benefits. And it’s not appropriate for us to undermine the intention of the legislation, or change where the line is ‘drawn’. I’m satisfied that Mr P’s two pension plans with Royal London were held under the same Registered Pension Scheme – the Royal London Personal Pension Scheme (No.3) – formerly the CIS Personal Pension Scheme. And I’m not persuaded that Royal London acted inappropriately in explaining to Mr P that he couldn’t take the monies from these pension plans as a single lump sum (or two single lump sums) without first seeking advice from a regulated financial adviser with the requisite permissions to advise Mr P on this. I also think it’s apparent from the October 2019 phone discussions between Mr P and Royal London that Mr P was reluctant to pay for financial advice. And, as was his prerogative, Mr P ultimately decided to proceed with taking his pension benefits in a format that didn’t involve him paying for financial advice – he took the available tax-free cash from the policies and used the residual monies to purchase annuities with Provider J and Provider S. So, my findings in respect of the portion of this complaint that relates to Royal London telling Mr P he couldn’t take his pension monies as a lump sum due to “Money laundering” are: I’m not persuaded on the available evidence that Royal London ever did tell Mr P he couldn’t take his monies as a lump sum(s) due to money laundering. But I’m satisfied it did tell him that he couldn’t take his monies as a lump sum(s) without first obtaining advice from a regulated adviser with the appropriate permissions to advice on this. Further, I don’t think Royal London acted inappropriately or unreasonably in explaining this to Mr P. So, overall, I don’t think Royal London did anything wrong in respect of this element of the complaint. The Provider J and Provider S annuities Royal London has provided this Service with an “Application Timeline Report” for each of Mr P’s Royal London policies. This report contains system records of notes that were added to Royal London’s system and shows when they were added. For both of Mr P’s policies the report shows a note that was added on 29 October 2019 and which says, “Booked in for GAR triage with [name of Royal London employee] 04/11/19 at 14:00 Customer knows to have policy information to hand.” So, I’m satisfied that Mr P arranged to have a GAR triage discussion with a Royal London employee on 4 November 2019. Royal London has also provided us with a copy of its GAR Triage Script from the time. Amongst other things, the wording in the script includes the following: “This is a non-advised service.” And: “If you are at all unsure about your options and you would like to speak to someone who can review all your options and make a personal recommendation, you can find

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an adviser by visiting: unbiased.co.uk. Please note they may charge a fee for their advice. Would you like to contact Financial Advisor before proceeding?” And “When you pass away your income payments will come to an end, however there is the option to provide an income or a lump sum to someone else. If you include this you will receive a lower income during your lifetime, but it would mean that you are passing benefits onto a loved one. Would you be looking to include a Beneficiary in your quote?” And also: “By not including a dependant’s pension, a guarantee period or value protection, the income you receive during your lifetime will be higher. However, in the event of your death, the payments will stop. Are you happy with this?” There is then a note on the system from 4 November 2019, for both policies, that says: “Customer wants quotes for: 25%, SL, no g, level, monthly in adv Told timescales, wants them emailed to him” This refers to taking 25% of the funds as a tax-free cash lump sum and the annuity being set up on a single life basis, with no guarantee period, level (not increasing) payments and with annuity payments being made monthly in advance. Overall, from the contemporaneous evidence, I think it’s more likely than not Mr P requested quotations for annuities on a single life basis, with no guarantee period, level payments and with annuity payments being made monthly in advance. And that Royal London would have explained to Mr P what this meant, including the fact that there would be no payments after he died. In the “What Happened” section above, I’ve referenced details from various documents we’ve seen following on from Mr P’s GAR triage discussion with Royal London. This includes an application pack, application forms, quotation documentation and documents that were sent to Mr P after the annuities were established. As I’ve set out relevant parts from these documents earlier in this decision, I’ve not repeated their contents again here. Overall, I’m satisfied it was clear from the documentation Mr P received at the time that the annuities would pay him an income until he died and that there would be no further payment, or return of monies, from the annuities he was purchasing after his death. I think information about this was set out in a clear, fair and not misleading way in that documentation. I’m also satisfied it was made clear in paperwork from the time that Royal London wasn’t giving Mr P any advice and that he would have to make his own decision on how to proceed. Further, that Royal London could help Mr P find a financial adviser if he needed advice. So, I think Mr P completed and returned the paperwork to establish his annuities in the knowledge that Royal London wasn’t advising him on what the best option was for his circumstances, and that he could seek financial advice from a financial adviser if he wanted to do so. It appears that Mr P decided to proceed without seeking professional advice. And I’m satisfied Mr P gave the instruction for his Royal London pension monies to be used, after tax-free cash had been paid to him, to purchase annuities (with Provider J and Provider S)

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which would continue to be paid to him throughout his lifetime and which would stop when he died. Royal London didn’t undertake to advise Mr P on what was the best option for him. And I don’t think Royal London is responsible for Mr P deciding to proceed without advice or for Mr P instructing that the annuities be set up (with Provider J and Provider S) on a single life basis with no guarantee period and no dependant’s pension after he died. Overall, I’m not persuaded Royal London has done anything wrong in respect of the service, or information, it provided as part of Mr P’s applications for his annuities. So, I find that Royal London also didn’t do anything wrong in respect of this element of the complaint My final decision For the reasons I’ve detailed above, my final decision is that I don’t uphold the estate of Mr P’s complaint about Royal London Mutual Insurance Society, Limited (THE) and I make no award. Under the rules of the Financial Ombudsman Service, I’m required to ask the estate of Mr P to accept or reject my decision before 28 April 2026. Alex Mann Ombudsman

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