Keith Wallace runs the rule over the myriad bodies that handle complaints about pension schemes

Pensions are very much in the news at the moment - and it is worth reviewing what practitioners should do when faced with an enquiry or potential complaint relating to a pension.

The good, or bad, news is that in the majority of cases practitioners do not need to, and should not, become closely involved.

Generally, they only need to direct the enquirer towards the competent and free services that are currently available for carefully investigating and handling pension problems.

The principal provider of redress in this area is the Pensions Ombudsman.

But if the issue relates to sales and marketing of individual pension products, then the Financial Ombudsman Service (FOS) is the place to go.

The boundary between the Pension Ombudsman and FOS is delineated in a memorandum of understanding, which was published in October 2002 and is available on the Pensions Ombudsman and FOS Web sites.

The Pensions Ombudsman's scope entails making findings of fact and law, and he may also award redress for 'maladminis-tration'.

The latter has been creatively - and broadly - inter-preted by pensions ombudsmen, although its developing ambit has been slightly reduced by subsequent court decisions.

However, before being able to approach the Pensions Ombudsman, complaints regarding an occupational pension scheme must first be filtered through two processes.

Since 1997, all occupational pension schemes have been obliged to have in place a two-stage internal dispute procedure.

A complaint or grievance must be taken through that procedure.

There are real benefits here, since it enables the issues to be clarified and the documentation that each party relies on to be recorded and disclosed.

If the enquirer is dissatisfied with the decision at stage two of the scheme's internal dispute procedure, it should then be referred to the Office of the Pensions Advisory Service (OPAS).

This service has a well-staffed central office - last year its helpline took 40,000 calls - and its written casework in the same period reached 11,875 cases.

In handling pension problems, OPAS utilises a countrywide network of 450 volunteer advisers, all of whom are senior professionals in the industry.

The OPAS advisers help to resolve many of the grievances through a combination of explanation, conciliation and negotiation.

Their presence provides the assurance of an independent and expert view of the problem.

Members of the public are often comforted that an objective party has reviewed the issue that has given them concern and has confirmed - in many cases - that the scheme had been acting entirely correctly.

Only if OPAS was unable to resolve the issue was the complainer entitled to approach the Pensions Ombudsman at all.

(This process has a salutary benefit to the public purse - both OPAS and the Pensions Ombudsman receive government funding, but OPAS's cost of disposing of a case is much lower than that of the ombudsman.) However, the current ombudsman is entertaining some 'direct' complaints, but using OPAS still has advantages.

Taking a complaint to the scheme's internal procedures, to OPAS and to the Pensions Ombudsman is entirely free of cost, or cost-exposure, to the claimant.

The issues are quickly identified, and objective and professional assistance is afforded by OPAS, so there can be few issues where it would make sense for a solicitor practitioner to have any deep involvement in the process at all.

Three ombudsmen have held office so far and the first two declined to make any award in favour of complainants towards legal costs that they had incurred, taking the view that as solicitor involvement was not essential, there could be no ground for reimbursement.

The current ombudsman has recently taken a different line, but it is still the case that a successful complainant cannot have any guarantee of having his legal bill reimbursed.

If you or your client think you could do better by going to court, restrain yourself.

The ombuds-man's 'maladministration' ambit means there are several areas where scheme members have additional heads of redress and compensation over and above what a court could award.

And as the ombudsman makes rulings of fact and law, there is little a court could do that he cannot.

There is no upper financial limit to his jurisdiction - some of his awards have had big-ticket financial consequence.

He can also make orders against employers and pension administrators.

The only real deficiency with the ombudsman currently is that while he can group all complainants with a common scheme grievance, he lacks the High Court's power to make 'representation orders' bind - to their advantage or disadvantage - a complete class.

The ombudsman operates a three-year knowledge rule for entertaining a complaint (and cannot take a complaint if court action has been started), so the worst thing a solicitor can do is to try and handle it himself and end up putting the client out of time or scope.

If the dispute involves a personal pension arrangement - if satisfaction cannot be obtained from the initial point of contact, say, the insurance company - then the dispute should be referred automatically to OPAS, with a view to its movement onwards to the Pensions Ombudsman.

The exception is if the issue relates to the sale or marketing of the product, in which case the provider's own compliance department should first be contacted.

If the issue is not resolved at this level, then it can be referred to the FOS.

Are there ever occasions now for court action? Not many, is the answer.

Sex equality and part-timer issues go to employment tribunals (but beware time limits for making a claim).

Member class actions are encountered in court, and beneficiaries have, of course, to be represented in trustee-led issues involving construction of scheme documents.

The courts are now receptive to making a 'pre-emptive' costs order, giving, on terms, beneficiaries access to scheme funds to finance their case if it is a compelling one.

This is specialist stuff and macro-pension scheme litigation resembles the clash of the Titans, with no pebble left unturned.

But for individual grievances, tell clients to use the free sources and leave it to the experts.

Solicitor Keith Wallace is a consultant in investment, pensions and financial services at City-based law firm Richards Butler

Pensions low-down

- Pensions Advisory Service - 11 Belgrave Road, London SW1V 1RB; tel: 0845 601 2923; www.opas.org.uk.

- Pensions Ombudsman - 11 Belgrave Road, London SW1V 1RB; tel: 020 7834 9144; www.pensions-ombudsman.org.uk.

- Financial Ombudsman Service - South Quay Plaza, 183 Marsh Wall, London E14 9SR; tel: 020 7964 1000; www.financial-ombudsman.org.uk.

- Association of Pension Lawyers - www.apl.org.uk.

- OPRA (regulator of pensions schemes but does not handle disputes) - Invicta House, Trafalgar Place, Brighton BN1 4DW; tel: 01273 627 600; www.opra.gov.uk.