Growing concerns about the rise in bad pension transfer advice has led to increased pressure being placed on the Financial Conduct Authority (FCA) to take action.
Since 2015 over 160,000 people have cashed in their final salary pensions may have been given bad pension transfer advice, with the FCA stating they believe as many as 80% of firms were responsible in a market currently worth £80bn.
In late January it was revealed that the FCA planned to write to 1,841 advisers about “potential harm” that could be caused as a result of their transfer advice. This is representative of 76% of the 2,426 companies who have been offering advice to people between 2015 and 2018.
How mis-sold pension transfer advice takes place
Anyone considering cashing a defined benefit (DB) pension worth £30,000 or more is required by law to seek independent advice from a regulated pension transfer specialist adviser.
Financial advisers are expected by the FCA to start from a position that a DB pension transfer is not the right option for their client. This is because the FCA believes the secure income stream offered by the pension is extremely valuable, and it will also continue to pay a surviving spouse after death.
When pensions are transferred to defined contribution (DC) agreements they are exposed to the volatility of the stock market. It is then the responsibility of the pension holder to manage the investment, or to pay someone else to do so, to ensure they do not lose all of their money.
Yet it was discovered by the FCA that of 235,000 who sought advice between 2015 and 2018, 69% were recommend to transfer their pension from DB to DC arrangements. The governing body believe this figure to be too high and in many cases not in the best interests of consumers.
Of particular concern to the FCA are scenarios involving conflict of interest. This mostly occurs when advisers only get paid after a pension transfer has taken place – which encourages them to tell their clients a transfer is the right thing to do, when in fact the opposite may be true.
Have you been mis-sold a pension?
Pension advisers have strict codes of practice to follow.
If you feel the answer is “no” to any of the following, you may have been mis-sold to.
- Did the adviser consider your health and medical issues?
- Did the adviser give you all the information you needed?
- Did the adviser properly explain the risk involved with transferring your pension?
- Did provide you with all the options available to obtain the best possible deal?
What to do if you believe you have received bad advice
While the FCA will not release the name of the firms being written to, you can ask your adviser if they have been contacted. You should ask for more details about any concerns raised and if the FCA have asked them to offer any sort of redress.
How to reclaim lost money
Goodwin Barrett have successfully helped hundreds of people claim compensation for mis-sold pensions.
If you suspect that you may have been mis-sold a Pension in the past, then you could be entitled to compensation. If you think you may have been mis-sold a pension, get in touch with Goodwin Barrett to find out how we can help – on 0808 163 1659 or email firstname.lastname@example.org.