The pensions mis-selling scandal has been raging on for several years now. Transferring pension products can cause problems for consumers, especially if the new pension wasn’t adequately explained at the time, or the risks weren’t outlined in full.
Kingsway Wealth Management is one of the latest firms to collapse as a result of pension product mis-selling. Here’s more information about the situation.
What were Kingsway accused of?
To date, the FSCS has received 41 claims against Kingsway Wealth Management, with only three being unsuccessful. All the claims were regarding pension-switching (undertaken by their appointed representative, Pension Transfers Limited). It’s possible that more claims will be passed on from the FOS in the future.
Documents from Companies House proved that pension switches were arranged from 2009 to 2012, swapping defined contribution schemes for SIPPs. As a result of these transfers, several clients were left out of pocket, with some suffering significant financial losses.
Kingsway initially tried to contest the charges; stating that the responsibility of the financial losses shouldn’t fall solely on them, but should be shared with the clients themselves, plus their financial advisors and SIPP providers.
However, this was overruled, and the FOS ordered the firm to pay out £327,000 in compensation for the pension switches. The FOS also recommended that Kingsway put aside £2.6 million to cover any claims made in the future.
So far, £133,000 has been paid to three of Kingsway’s ex-clients.
What’s happened since then?
Kingsway went into administration in December 2019, as a direct result of the claims they were facing. The administrators have since indicated that the firm was facing as much as £3.1 million of claims, but that these hadn’t as yet been examined by the FOS.
If you’ve been affected by this situation, please note that any outstanding claims may still be passed to the FSCS, who in May 2020, announced that the levy for the year 2020/21 had increased to £649 million.
Signs of mis-selling pension products
In the case of Kingsway Wealth Management, pension transfers were made without the new product being adequately explained. Here are some classic signs of pension mis-selling:
- Your attitude to risk wasn’t assessed. SIPPs can be financially advantageous, some may be more volatile than others. Your financial advisor should have assessed your attitude to risk, and explained the risk-level of your chosen pension product.
- Your advisor didn’t give you the full details of the product. Lack of information is one of the key issues in pension mis-selling. It’s your legal right to have the pension product properly explained to you – if key details were omitted, this may cause problems further down the line.
- You were pressurised into a particular product. Your financial advisor should offer you a range of pension products that are suited to your needs. If you felt that your choice was limited, or that you were pressured into selecting a specific pension, this may count as mis-selling.