Scottish Widows Complaint: PO-14071

Later comments in response to the Determination.

Mr Arter left this paragraph unchanged in the Determination, and thus ignored the crucial points with clear proofs I made above. But this vast misstatement was needed to sustain the position in [28.3] that SW's requirements conform to AML guidelines in requiring only a single document to verify identity. It also gives the impression that I am unreasonable in describing them as onerous.

Note also that national ID card is mentioned as valid verification of identity, despite Mr Arter's strenuous assertions in [45] and in the statement of [24.2] that this is not an acceptable form of verification!

It is possible that SW later moderated their requirements, having found them too onerous (for SW, that is, not their customers), and that the above reflects the current situation. However, given the correction above, my clear documentation, and its importance to the case, this can hardly be a genuine mistake.

The telephone conversation was in fact an interview required by Scottish Widows before they will encash a pension policy. in my case, it took about an hour and a half, most of which comprised thinly-disguised efforts to dissuade me from encashment. With my hearing difficulties, I found it a nightmare, and was a nervous wreck afterwards. Although this matter is non-criminal, I do not consider it acceptable to impose this condition for encashment.

The above statement hides the embarrassing fact that this is the first of Scottish Widows' two attempts to defuse my serious complaint. It requests me to send documents that they had previously rejected as invalid (on account of a 2007 bank statement as proof of address). See [9]. Also sent by email on 1 July.

This is the second of SW's "offers" in dealing with my complaint, after I had told SW that they had no business to require proof of address in addition to proof of date of birth. My national ID card provides good proof of both name and DoB, so this document alone would satisfy AML verification requirements. As the email lacked credibility, I did not respond, and they followed up by post three weeks later.

This again conflicts with the untenable assertions in [24.2] and [45] that my national identity card is not an acceptable form of verification. In an apparent attempt to prop up this position, in [24.5] it was claimed that this offer, made on two separate occasions by two different employees, should not have been made.

Mr Arter did nothing whatever to address the points I made above in his Determination. Indeed, in [42] he contradicted the above statement (maybe he was confused by the incongruous [24.3]).

Against all the evidence, Mr Arter continues to assert that my national identity card is not a valid form of Name verification.

I think it is quite clear from my above reply that both the original PDF form and the latest paper form (dated 1 June 2016) unconditionally allow national ID card as proof of Name. As I explained, these two forms are very similar, free of obvious errors, and clearly the most recent version. The remaining paper forms are quite different and full of obvious errors. These must be older, presumably from a stock of pre-printed copies (the PDF form should be more up-to-date, as it would be used to make the hard copies).

The form sent with the rejection letter of 14 April 2016 is patently NOT correct as (for non-UK residents) for evidence of Name it specifies (EEA) member state identity card ... - if not used for evidence of address verification, whereas for evidence of Address it specifies simply National Identity Card (if not used to verify name and it shows the address). Anyway, there would be no good reason for SW to generally disallow national ID cards from non-EEA member states. This form also states for Address that Utility bills including mobile phone bills printed from the internet ARE acceptable (clearly wrong and inconsistent with specifications elsewhere). All five paper forms SW sent before the last are replete with obvious errors.

Not stated in my Opinion Rejection is that page 4 of the confirmations of telephone interview for policies P56879Q and N80803X also specifies National Identity card as valid proof of name, if not used to verify address.

And although it was found necessary to state that SW's offer to accept my national ID alone as verification should not have been made (see [24.5]), there is the further difficulty (for SW/TPO) that another SW employee sent a follow up three weeks later (see [20]). And in TPO's false report of SW's requirements (see [7]), the list of valid forms of verification of identity includes plain national identity card!

In [42] Mr Arter continues to assert that bank statements might verify my address.

Mr Arter could have (and would have) dismissed my rejection above if the statement were true, as it is very strong evidence in contradiction of the legitimacy of SW's documentation requirements (and Mr Arter is clearly an expert on AML regulations!). However, he stated only:
[31] ... He insists that he has carried out other transactions from abroad and not faced similar issues with the transfers.
and:
[36] ... I cannot comment on the previous instances where Mr S says that he has transferred funds, my review is limited to the facts of this particular case. ...

But the unsatisfactory statement above said to be from Scottish Widows is part of the facts of this case, and it has not been addressed.

This appears to be another effort to deny the validity of my national ID card; as mentioned, this position is made even more difficult by the fact that another SW employee followed up this offer three weeks later.

This is only part of incontrovertible evidence showing that my national ID card was specified as a valid form of verification, and was allowed as such. But although TPO seems to have a desperate fixation on the pragmatic solution based on an alternative to my national ID card, they made a bad mistake in including National identity card in their bowdlerized list of verification requirements ([7]).

This is a misleading incomplete sentence from my email of 11 November 2018, with the spurious full stop disguising the fact that a key point follows. My statement continues:
... under the blatant false pretence that they 'are required under UK legislation.'

TPO's partial quotation gives the impression that I have been unreasonable in describing SW's conduct as criminal. It also omits my important point that Scottish Widows is guilty of a false pretence. This key point is not mentioned anywhere in the Opinion or Determination. Without the false pretence, their conduct would be gross maladministration, but presumably not criminal, and I would not describe it as such.

This essentially comprises two assertions, neither of which has any specific explanation (Ms Stephens claimed that just being required to comply with the Money Laundering Regulations was sufficient):

1. that Scottish Widows was correct in applying due diligence in my case
2. that the form of this due diligence (i.e. the documentation requirements) was appropriate

The following section contains the TPO explanation for the first assertion, and my response. This section deals only with the nature of the documentation requirements. One can hardly describe this adequately here. To see how absurd is the claim that SW was entitled to have asked me to provide the information in the format that it did, see a summary of SW's requirements together with the Verification Issues page (which includes links to government documents).

And the grossly erroneous and changing nature of the documentation not only demonstrates a negligent disregard for the customer, it is also strong evidence that it has nothing to do with AML, as it is quite inconceivable that documentation that should date back to 2007 would be in such disarray - see [40].

Note that [7] falsely indicates that only a single document was required for verification of identity, even though this directly contradicts the clearest evidence (including the requirements email and form). Given the care I have taken to describe the situation, and the importance of this information to the case, I can hardly believe that this was accidental. The effect is to lend credibility to TPO's assertions that SW's documentation requirements are reasonable. It also conveys the impression that I am unreasonable in describing them as onerous (note also [27] above).

My unusual situation (Mexican residency) has led TPO to claim that this justifies SW's documentation demands; that enhanced due diligence is required since, being in Mexico, I was not physically present when the identification checks were carried out.

This appears to ignore the statements I made below, in which I explained that identification was carried out in the UK on a face-to-face basis (this is referred to as Standard evidence in the Appendix 5.1.1 of the Anti-money laundering guidance). Verification of identity follows as 5.1.2, and this must be what is referred to above as identification checks, as I have already been identified.

TPO states that enhanced due diligence should be carried out when the customer is not present when the identification checks are carried out. However, section 7.11 (Enhanced due diligence) of the AML guidance states that EDD is applied when the customer has not been physically present for identification purposes. Note the use of the present perfect tense; I have been present in the UK for identification, and as such am a face-to-face customer, not requiring EDD. TPO's assertion is therefore incorrect.

But the basic premise is that my Mexican residency makes me a special case as a non face-to-face customer requiring enhanced due diligence. Not only is this contradicted by section 7.11, but its folly is clear in that the customer's country of residence does not determine whether or not the transaction is carried out face-to-face. In fact few if any customers are likely to visit SW's premises to encash a pension, even if they are resident in the UK. Most, if not all such transactions, regardless of where the customer lives, are "customer not present". So there is no material difference for this purpose between my situation and a UK resident. There is no basis for the implication that living in Mexico makes me a special case.

The TPO assertion is also inconsistent with the facts of the case. There was no indication from either SW or TPO that my Mexican residency makes me a special case until the Opinion (which contains numerous other inept statements in connection with AML). SW's Final Response states that their documentation requirements are applied to all customers wishing to encash (certain types) of pension policies. The confirmations of telephone interview say that verification of identity was required as they were not able to confirm this through the credit reference agency we normally use.

See the chronology of my dealings with TPO (which includes the complete correspondence) to see how I have been treated by TPO, and how my cautiously-expressed concerns have been "dealt with". It is no surprise that Mr Arter did not want to address these matters in the Determination.

Contrary to Mr Arter's strange statement, AML regulations have nothing to do with protection of the consumer. They are to protect the UK financial system, and also to help in the fight against crime. There may be a secondary beneficial effect on finance companies, but any beneficial effect on consumers would be tertiary at most.

However, this feigning of consumer-friendliness is consistent with many other duplicitous statements from Mr Arter, who rules against the legal rights of the consumer while claiming it is for their own good.

As someone who holds shares in 22 pension providers and has a background as a solicitor acting for such companies, Mr Arter can hardly have any credibility as a defender of pension holders' rights.

Mr Arter (like Ms Stephens) seems to be rather confused about terms like "identification", "verification of identity", and "identity checks". He now inappropriately refers to verification checks.

Again, Mr Arter tries to capitalise on my Mexican residency; however my comments in <35> and the following section make clear that this is not relevant to AML circumstances. Neither should there be any grounds for suspicion over the HSBC bank account in my full name of Ian Clive McInnes, which Scottish Widows already held, from which I supplied SW with a bank statement, and to which numerous large transfers have been made from the UK by both Lloyds and Scottish Widows since 2006.

I also dealt with the reasons set out by the Adjudicator in justification of customer due diligence (or is it enhanced due diligence?) in <35>. These can have little credibility, and Mr Arter must be desperate to uphold them.

Again, Mr Arter asserts that Scottish Widows has not acted unreasonably in the requirements provided to Mr S. I can only refer readers to my narrative of these requirements, so that they can judge the matter for themselves. Again, I provide you with evidence in the form of documents.

Nice try at a catch-all clause in AML regulations Mr Arter, but it doesn't quite work...

Regulation 27(9) of the 2017 Regulations states:
For the purposes of paragraph (8), in determining when it is appropriate to take customer due diligence measures in relation to existing customers, a relevant person must take into account, among other things-

1. any indication that the identity of the customer, or of the customer's beneficial owner, has changed
2. any transactions which are not reasonably consistent with the relevant person's knowledge of the customer
3. any change in the purpose or intended nature of the relevant person's relationship with the customer
4. any other matter which might affect the relevant person's assessment of the money laundering or terrorist financing risk in relation to the customer"

None of these conditions is remotely applicable to my case. They all relate to fundamental changes to the nature of the customer or the relationship. The fact that I now live in Mexico (which Mr Arter again attempts to use as justification in [36]) can hardly be relevant here, and there are no other changes.

Incidentally, discretion goes both ways; there is no good reason to deny payment when there is concrete proof of identity of the payee. In my case, the bank account in my full name alone provides this.

Mr Arter says that he has seen no evidence to support my claim that this is simply a convenient excuse to prevent him from taking his benefits. In fact, my primary contention is that they are imposed under a false pretence (nowhere is this mentioned in the Determination). I also expressed my belief that SW's requirements are part of a fraudulent strategy to deter pension encashment (probably after the Pension Freedom legislation of April 2015, with its 25% tax concession). He has clearly not looked very carefully.

Firstly, there is the matter of the requirements themselves and all the difficulties surrounding them. Although Ms Stephens and Mr Arter have done their best to hide the facts of these, careful scrutiny shows that they are so cumbersome in relation to AML guidelines (were due diligence required) that they could not possibly have been implemented in the genuine belief that they were legitimate.

Secondly, SW's evasive behaviour when confronted with my complaint demonstrates clearly that they knew their conduct was unlawful. And they would hardly make their two offers to accept (a) my invalid bank statement and (b) only one document instead of three, if all their demands really were required under UK legislation. The five telephone calls they made after my case was assigned to the Adjudicator are further evidence of the importance they attached to suppressing my complaint.

Thirdly, and perhaps even more telling, is the grossly erroneous and changing nature of the requirements documentation. As I mentioned, the original PDF form and the latest paper form (dated 1 June 2016) are very similar, free of obvious errors, and clearly the latest revision. The remaining five paper forms are full of conspicuous errors; I list them here in chronological order of the date they were sent:

• two of 6 April 2016 (the day after my application) for P56879Q and N80803X
• that of 14 April 2016 in the rejection letter
• that of 24 May 2016 for P56879Q
• that of 26 May 2016 also for P56879Q

The AML regulations applicable to my application of 5 April 2016 are those dated 2007 (the next update was in 2017). If the requirements were introduced in respect of this (or an earlier) implementation, the documentation would date from that time and thus be well-established and error-free at the time of my application. So it is absolutely inconceivable that the shambolic requirements documentation provided by Scottish Widows could have arisen from compliance with AML regulations.

This supports my contention that it was introduced shortly before my application of 5 April 2016, most likely to stem the increase of pension encashment that would inevitably follow the Pension Freedom legislation of the previous year. I think that this is what SW obliquely refers to as UK legislation.

I am not sure what Mr Arter is referring to when he states that SW has tried to find other means of assisting me to comply with their requirements - did he mean their two attempts to defuse my complaint before I approached TPO (which the Opinion and Determination endeavour to conceal), or the pragmatic solution imposed by TPO after a year of delay and prevarication? Also, compare with [47].

But the attempt by Mr Arter's office to achieve a mediated solution is the pragmatic solution dating from 3 October 2017, which he appears to believe is legitimate. This was not mediation, but forced upon me in lieu of investigation and determination; there was no response to five emails I sent to TPO (including three to Mr Arter) in its rejection. And any mediation should be done by TPAS, not TPO.

SW also requires a birth certificate to be provided, when there are many other legitimate ways to verify date of birth. Thankfully I hold this document, but my subsequent experiences indicate that it would be very difficult for me to obtain a replacement suitable for verification purposes.

As I have made clear, SW does not hold my residential address here in Mexico, only one at which I can receive mail. So there is no way that I could provide proof of address that would be valid for AML verification purposes. It is not my fault that Scottish Widows did not take my situation into account. And by TPO's statement in [24.2], I am also allowed only driving licence and passport for Name verification - there should be no requirement to hold either of these documents (especially given the 14-day time limit).

This is in clear contradiction of [24.1], which asserts that I had already supplied acceptable proof of address ( although maybe as a result of being confused by the incongruous [24.3]). Again, I have explained in detail that I cannot supply a bank statement with the address held by Scottish Widows; but even if I could, it would not be valid for AML verification purposes, as (since mail cannot be delivered to my home address) it would be for a mailing address.

The absurdity of Mr Arter's efforts to sustain his position that a national ID card is not acceptable has been made abundantly clear in [24.2], [7], and [20]. He is clearly highly-motivated to support a pragmatic solution that in any case is a gross breach of the Pension Schemes Act (but he apparently believes that arbitration is a legitimate function of TPO, when this role is properly provided by TPAS).

Despite the information received by TPO both in my case documentation and that above in the Opinion Rejection, Mr Arter falsely states that my application was forwarded by FOS to TPO. In fact, I was already aware of TPAS and TPO from a previous attempt to obtain my army preserved pension from Equiniti Paymaster (who also provided invalid complaint information), so was not fooled.

This is not a trivial point; this false information combined with the pension administration complaints on the FOS website shows that FOS has dealt with (and rejected) a number of SW complaints that it should have passed to TPO. This provides clear evidence of an improper relationship between SW and FOS. There is now even clearer evidence of such a relationship between SW and TPO.

This ignores (conceals) the inconvenient fact that Scottish Widows did indeed offer an alternative approach (once they knew a complaint was brewing). I have made abundantly clear that SW offered me two means to encash my pension before I approached TPO:

1. (after I requested their IDRP) they sent an email offering to accept the documents by post as I originally emailed them (including the rejected 2007 bank statement)
2. (after I stated that under AML regulations they should not have required proof of address as well as proof of date of birth) they offered to accept my National Identity card alone (see [20]).

So when TPO pushed their pragmatic solution, it was not only patently illegal (even though I was at that time not familiar with the Pension Schemes Act) but also patently ridiculous, as I made clear in my first rejection of 4 October 2017.