Embark's case
However, Embark stated that the terms and conditions of the Sipp’s deed and rules did not specify the process for making client withdrawals and believed that it was more than acceptable that it accepted scanned copy documents.
Additionally, as Mr N requested a withdrawal prior to the fraud, it was not untoward to receive an email directly from Mr N to query the income instruction processes and for it to provide forms in that manner.
TPO's ruling
The Pensions Ombudsman found that if Mr N has suffered a loss because of Embark’s negligence, Embark will be responsible for putting Mr N in the position that he would have been in, but for its negligence.
It added that the loss was a “foreseeable consequence” of Embark replacing his bank details with those of the fraudster and flows directly from that action.
TPO also examined whether Embark failed to act with the skill and care of a reasonably competent administrator.
It stated that, while it has sympathy for the position Embark was confronted with, the respondent did not act with “reasonable skill and care”.
The ombudsman stated that the complaint was upheld against Embark because it had acted negligently in allowing a person impersonating Mr N to change his bank details held on the Sipp account.
Additionally, the situation had caused Mr N serious distress and inconvenience for which he shall receive an award.
The ombudsman therefore said that Embark should reimburse into Mr N’s Sipp the sum required to ensure that he has the same number of units as before the fraudulent sale.
Embark was also told to pay Mr N £1,000 for the “serious distress and inconvenience” the situation had caused him.
Embark's response
In response, an Embark spokesperson said: “Protecting our customers from fraud is our priority and we have a great deal of sympathy for Mr N as the victim of a scam.
“We appreciate that while his email account had been compromised – which allowed the fraudster to impersonate him – we could have done more to prevent the withdrawal taking place, based on the evidence available at that time.
“We accept the Ombudsman’s decision in full and have written to apologise again to Mr N for the distress caused, while also ensuring he has suffered no financial loss as a result of the scam.
“It is important to note that this case dates back to 2019, almost three years prior to Lloyds Banking Group’s acquisition of Embark, and our fraud prevention systems have improved significantly since that time.”
tom.dunstan@ft.com
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