The Prudential Assurance Company · DRN-6182580

The complaint Mrs C and Mrs B1, as trustees of the DB and NB Family Protection Trusts, complain to The Prudential Assurance Company about the wrongful surrender of investments and subsequent loss of growth. What happened In May 2012, following advice from their building society, Mr and Mrs B set up two trusts – the DB Family Protection Trust and the NB Family Protection Trust – to place their property and savings into. The trusts appointed a company, Trustee F, as trustee along with themselves. Across both trusts, investments were made in Prudential bond plans. On 20 December 2018, a form was signed to change the trustee from Trustee F to another company who I will refer to as Trustee P. On the same day, Mr and Mrs B signed Prudential’s forms to cash in all policies within the plan with the proceeds to be paid to the former trustee, Trustee F. The form was also signed a month later in January 2019 by someone on behalf of Trustee F, who I will refer to as Ms M. Mr and Mrs B didn’t realise they were instructing the sale of the trusts investments, instead, they thought the forms were related to the change to Trustee P. The surrender proceeds of around £105,000 were reinvested by Trustee P and later lost. Trustee P went into administration and through that process, the investment proceeds have been recovered. In May 2023, Mr and Mrs B’s daughters – Mrs C and Mrs B1 – were appointed as trustees. A complaint was made to Prudential in May 2024 which highlighted a number of specific concerns with the surrender in early 2019. They pointed to paperwork which had numerous discrepancies with missing signatures, contact details for the trustees in place of Mr and Mrs B, outdated proof of address, problems with identity checks, along with issues around the former trustee being allowed to surrender the bonds. Prudential sent their final response letters to Mr and Mrs B in December 2024 and didn’t uphold the complaint. They were satisfied the surrender of the investments was done properly and that they hadn’t been notified of any change of trustee, hence taking instruction from Trustee F. The family asked for our help as they remained unhappy – they felt Prudential had given over £100,000 of their money to scammers which had subsequently been lost. Had the surrender not been approved and the money remained invested, there’d have been significant gains of around £30,000 since 2019 and they would have saved around £4,000 in legal fees too. They thought some of the major red flags were using an unrecognised phone number, changing the address and company three times, deliberately incorrectly filling in forms, not getting basic identity checks done, accepting an unauthorised signature, falling short on money laundering checks, not checking in with Mr or Mrs B at all and a general impression that Trustee F had been hounding Prudential to release the funds. The matter had caused them all a great deal of distress and inconvenience which they too wanted compensating for.

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In the meantime, Prudential sent a further two final response letters in May and June 2025 addressing concerns about the complaints process and the specific power of attorney (SPOA) used when authorising the surrender – but this didn’t change their position on the complaint. An investigator at our service considered the complaint but didn’t think Prudential had done anything wrong. She said, in summary: • she couldn’t see Prudential were aware of a change in trustee, and therefore thought accepting the surrender request from Trustee F – also signed by Mr and Mrs B themselves – was reasonable • she noted Mr and Mrs B had signed the surrender forms, and thought this ought to have been clear to them • she considered Ms M’s involvement in the surrender, but had seen she had authority to sign on behalf of Trustee F and that her identity had been verified • had there have been any issue with Ms M’s authority, she thought Trustee F would have had another of the authorised signatures sign instead, so the process was likely to have continued • she didn’t think any further checks or due diligence would have changed anything or allowed Prudential to foresee the money would go on to be invested in the way that it was Mrs C and Mrs B1 didn’t agree and sent a detailed reply which I have summarised briefly below: • our investigator had incorrectly concluded that the outcome would have been the same had Prudential done further checks or due diligence – this was speculative and unsupported by evidence or the regulatory framework • the due diligence failures were material and would have altered the process • though they’d signed the surrender forms, Mr and Mrs B didn’t know what they were for as the surrender box had yet to be ticked • the SPOA was invalid for four reasons: it wasn’t written solely for each trust, it didn’t have a time limit, it appointed several attorneys instead of one, and it contained an incomplete date • the ID provided for Mr B – being a car insurance renewal – was insufficient for an identification check, nor was it up to date – it was used seven years prior when setting up the trust • there were anti-money laundering red flags that required further investigation • internal notes highlighting contact from an unrecognised number ought to have triggered further investigation • the assumption that any further checks or due diligence wouldn’t have changed the outcome was hypothetical and unsupported – had Mr and Mrs B been contacted then irregularities in the forms would have been identified, authority would have then been questioned, with anti-money laundering concerns raised and the surrender wouldn’t have proceeded • the Financial Conduct Authority’s regulatory framework hadn’t been properly applied, this included the principles for businesses, systems and controls, financial crime obligations and money laundering regulations • Trustee F’s director had been charged with conspiracy to defraud Our investigator thought about what the trustees had said but didn’t agree – she said her findings weren’t speculation, she had instead applied a balance of probabilities test and thought no matter what was asked of Trustee F, they’d have been able to provide it. She also noted the issue with Trustee F’s director concerned his involvement with another company, and the articles reporting this were from January 2026 so this wasn’t something

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she thought Prudential could have foreseen in 2019. As an agreement wasn’t reached, the complaint was referred for an ombudsman’s decision. In closing, Mrs C and Mrs B1 wished to make clear that their parents were joint trustees with Trustee F so had they simply have been contacted, the surrender could have been stopped. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’ve reached the same conclusions as the investigator and broadly for the same reasons. I know this will be greatly disappointing for Mr B and his daughters, but I will explain why. And while I appreciate their strength of feeling here, I will focus my decision on what I believe to be the material issues but assure them I have read and considered everything they have said. As referred to above, some of the relevant regulations Prudential are subject to have been raised as part of this complaint – these have a wide application and so I have considered them, and their spirit, when making my decision. In late 2018, two key things happened – Mr and Mrs B were changing Trustee F to Trustee P and simultaneously, Mr and Mrs B and Trustee F instructed the surrender of the bonds. It remains unclear why the order of events unravelled as it did, for example, why a former trustee would try to involve itself with matter it is no longer concerned with. But this isn’t something I’ve been able to challenge here given the complaint we can look at is against Prudential – not against either Trustee F or Trustee P. What I can look at is whether Prudential acted fairly and reasonably when administering the surrender of the plan, based on what they understood at the time. Prudential have confirmed they weren’t notified of the change from Trustee F to Trustee P. Even two months later, in February 2019, they refer to call notes citing no knowledge of Trustee P and their suggestion that Mr and Mrs B contact Trustee F. Nothing has been provided to the contrary, to show us that Trustee P, Trustee F or Mr and Mrs B let Prudential know about the change. For this reason, I haven’t seen anything to persuade me that it was wrong of Prudential to take instruction from Trustee F. Though Mrs C and Mrs B1 raise concern that Prudential were at fault for acting on the authority of Trustee F only, I don’t agree – the instruction to Prudential was from Trustee F as well as Mr and Mrs B. I appreciate it’s been said that Mr and Mrs B didn’t realise they’d instructed a surrender, but that instead, they were signing forms relevant to the trustee change, but regardless as to how complete the form was when they signed it and whether the surrender box had yet to be ticked, the form was titled ‘Full and Partial Cash-In Form’. Prudential had to ensure their paperwork was clear, fair and not misleading and I think this was. If a third party were to have Mr and Mrs B sign an incomplete form amongst other paperwork associated with the trustee change, this isn’t something Prudential could fairly be responsible for. Mrs C and Mrs B1 have shared evidence showing Ms M has confirmed she wasn’t employed by Trustee F – implying her instruction on their behalf ought not to have been accepted. We asked Prudential about their reliance on Ms M’s authority on behalf of Trustee F and they shared the SPOA with us, showing that Trustee F’s director had named Ms M as one of five attorneys. There were potentially two problems with this though, firstly the four validity issues raised by Mrs C and Mrs B1 and secondly that Ms M now says she wasn’t employed by Trustee F. I’ll take each in turn. Looking to the Powers of Attorney Act 1971 and the Trustee Act 1925, I don’t share Mrs C and Mrs B1’s concerns about the SPOA. The rules didn’t prevent Trustee F creating a

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document that could be used for different trusts and with more than one signatory. And with no time limitations mentioned, the document was valid for 12 months, with the surrenders here happening within the first month. That said, the SPOA highlighted the attorney must be ‘employed by the principal’. I’ve thought carefully about this, given Ms M says she wasn’t employed by Trustee F. But like our investigator, my view is that if Prudential had discovered issue with Ms M’s authority under the SPOA, it’s more likely than not that Trustee F would’ve had someone else sign. I appreciate Mrs C and Mrs B1’s concerns around such assumption and speculation, but it is a key consideration of our service to think about what would otherwise have happened but for an error. Here, if Ms M’s authority had been rejected, another one of the four signatories could have resubmitted the form. Crucially, Prudential correctly paid the surrender proceeds to Trustee F, so there was no concern about the misappropriation of funds by Ms M and instead the surrender proceeded as it should have done with the trustees of both trusts – Mr B and Trustee F for his, and Mrs B and Trustee F for hers – signing the forms. Indeed, had either Trustee F or Trustee P gone on to unexpectedly receive the proceeds of the investments into their bank account, this is something they’d have questioned at the time and would have exposed any unauthorised action on Ms M’s part. So, it seems more likely than not that Ms M was acting on behalf of the intentions of Trustee F, and I don’t agree it appears Prudential did anything wrong in following the instruction to surrender and in paying the proceeds to the bank account of Trustee F. It is my understanding that the funds were eventually passed to Trustee P and reinvested, so even if Prudential were to have been notified of a trustee change and had they have waited to take instruction from Trustee P instead, it’s likely the outcome would remain the same. Turning to the surrender process and the concerns the family have around that, I’ve thought carefully about what reasonable steps Prudential ought to have followed. Looking at the paperwork Prudential shared in the course of us investigating this complaint, I can see they were aware of the trust structure and legal owners of each plan. With these withdrawals, it’s unclear what the process specifically was, but Prudential would generally check the surrender form, the trustee’s bank account and to verify Mr and Mrs B’s identity. I can see most of this was in hand, with the cash in forms, the SPOA and the bank account evidence submitted. But I take Mrs C and Mrs B1’s point that Mr B’s outdated insurance renewal wasn’t in line with a more common requirement of a recent utility bill. The spirit of identity checks was for Prudential to satisfy themselves that whoever was surrendering the bonds was the right person to be doing so. Here, there wasn’t the suggestion of any fraudulent or other untoward behaviour, and there was no dispute that Mr and Mrs B had signed the surrender instructions. Often, firms will use electronic means of checking to satisfy requirements such as ‘know your customer’ and for anti-money laundering regulations. I can see Prudential conducted such electronic checks on Mr and Mrs B which verified them at the same address cited in the original trust deed. I haven’t seen anything that ought to have concerned Prudential and prompted them to contact Mr and Mrs B. Even if they had, I think it’s more likely than not Mr and Mrs B could and would have provided suitable verification documents, given their general compliance with the surrender process. So, from everything I’ve seen, while it’s clear how unhappy the family are with what happened, I don’t think Prudential did anything wrong – instead, I find they acted in good faith on a surrender instruction and were unable to foresee the unfortunate future loss of Mr and Mrs B’s investments. It follows that I don’t think Prudential are responsible for the six

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or so years’ worth of growth on the funds, nor the distress and inconvenience the family have experienced. My final decision For the reasons given, I don’t uphold the complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs C and Mrs B1 to accept or reject my decision before 27 April 2026. Aimee Stanton Ombudsman

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