Reference: (2001) OPLR 273
Save & Prosper Group (SPG) was the manager of an occupational pension scheme in which Loot had participated since 1991. The trustee was Save & Prosper Insurance (SPI). The scheme originally consisted of a policy written by Save & Prosper Pensions (SPP). In 1995, a new type of policy was made available to scheme members with lower charges than the previous policy. Loot complained to the Pensions Ombudsman that it had not been made aware of the new policy.
The Ombudsman held that SPG was at fault as a manager of the scheme in not informing existing customers of the introduction of the new contract. He also found that SPI was in breach of its duty of reasonable care in not drawing to Loot's attention, either directly or through SPG, the existence of the new contract. Both SPG and SPI were guilty of maladministration. However as the scheme was a money purchase arrangement and Loot had given no benefit guarantees to members, there was no financial loss. SPI and SPG appealed.
In setting aside the Ombudsman's determination, Hart J held that the duty of a trustee to review investments is only required in a context where the trustee has a power to change investments. That need not be an unfettered power. A trustee who is required to obtain a third party consent to a change in investments must consider the state of his trust fund just as carefully as one who has an untrammelled power of investment. But a trustee who is mandated to invest in a particular way unless and until directed otherwise by a third party, is under no such duty. On the facts, Loot identified the policy into which contributions would be invested, and therefore, there was no basis in trust law for saying that SPI as the intended trustee in relation to those contributions had a duty to inform the employer that another policy might also be considered. SPG's only role in relation to the scheme was in marketing it to potential customers such as Loot. It had no role thereafter in the management of the scheme.
