Overview of our FCF process

Here’s an overview of the five steps involved in the process. 

Step 1: initial eligibility

We’ll consider whether the initial eligibility requirements are met as a first step. The application may be rejected on one of these grounds at this early stage.  

Step 2: offences involving dishonesty and categories of scheme asset reduction

We’ll consider whether scheme assets have been reduced, and whether there are reasonable grounds for believing that the reduction was attributable to an offence involving dishonesty. 

What evidence should be provided?

You’ll need to supply evidence that supports dishonesty – and explain who was dishonest, against who - and why you consider this links to the reduction in scheme assets.  

If you’re a member and transferred into the scheme, please send us any letters, communications or information that you received around the time of the transfer. This may have been from the trustees of the scheme, an introducer, or an administrator. You can also let us know of any calls or other correspondence regarding your transfer and what you expected to happen next. If you’re a trustee or administrator, please send us any member statements that you’ve obtained.

We’ll need to get in touch with the scheme trustees, and may need further information from them in order to progress the claim. It’s useful for us to see the scheme’s bank statements, if available. 

What are the offences involving dishonesty? 

There are a range of potential offences involving dishonesty.

We consider that prosecution is not required, but we need to be able to reach the conclusion that there are reasonable grounds for believing:

  • there was a reduction in scheme assets; and 
  • that reduction was attributable to a criminal offence involving dishonesty.  

A starting point is to consider the statutory fraud offences. For example:

Fraud by false representation (section 2 of the Fraud Act 2006):

1. Did the accused make a false representation?  
2. Was that false representation dishonest?  
3.  Did the accused intend to make a gain (for themselves or another) or cause loss or expose another to a risk of loss?

Fraud by abuse of position (section 4 of the Fraud Act 2006):

1. Did the accused occupy a position in which they are expected to safeguard the financial interests of another person? For example, a trustee of a pension scheme.
2. Did the accused dishonestly abuse that position?
3. Did the accused intend to make a gain (for themselves or another) or cause loss or expose another to a risk of loss? 

The fraud may be against the member in some cases or against the trustees, or others. It's also possible that trustees, directors of employers and administrators were involved in the fraud.    

Note that we do not need a list of all possible offences involving dishonesty. We encourage you to:

  • build up a picture based on evidence – where’s the dishonesty, and by who?
  • consider the scheme asset reductions.
  • consider whether the scheme asset reductions are attributable to a specific offence involving dishonesty, such as a fraud offence.  

Thinking it through like this should help you streamline your evidence gathering, so that you share what’s relevant with us.

What are the scheme asset reductions?

This is what the scheme has spent or assets it has transferred elsewhere.

For example, it may be a payment to a company in regard to a purported investment, commission for an introducer or administrator, or fees and expenses in trying to resolve the issues. 

If you’re a member, we’ll want to know what you think happened to your scheme pension (as that should have been an asset of the scheme), and what you think happened that was dishonest.

If you’re a trustee, we’ll be in touch for more detail on the scheme asset reductions (fees and expenses in particular). Consider which scheme asset reductions you think you can link to an offence involving dishonesty (see above).

Step 3: calculation of scheme loss

Once we’ve established any categories of scheme loss as part of step 2, the trustee will then need to liaise with us to instruct an accountant to provide the accounting information required under the legislation.  

Step 4: recoveries and the settlement date

Trustees have a duty to seek scheme recoveries under the legislation.  

As part of step 4 we’ll consult with the trustees in respect of scheme recoveries to:  

  • Determine whether any recoveries are attributable to a relevant offence.
  • Determine when we think further recoveries of value are unlikely to be obtained without disproportionate cost or within a reasonable time (which is known as the ‘settlement date’). 

Information required from trustees includes:

  • What potential recoveries have been considered? Which are not being pursued, and why?
  • The source of any potential recovery, information on the likelihood of success (if available), expected timeframes, and expected fees.   

Step 5: amount of compensation

We’ll consider the claim and previous steps and determine the amount of compensation payable to the scheme (this may include terms). The calculation of compensation takes account of any scheme recoveries.  

We can only pay compensation to the trustee, for the scheme. We can't pay compensation directly to members.