The FCA have been urging thousands to seek compensation for being wrongly advised to transfer out of their defined benefit pension. Over 2,600 people have received letters from the FCA, warning them of “action needed” and that they “could be owed money”.
This move comes as the FCA continues to crackdown on mis-sold pension transfers. In recent years, there has been a higher level of transfers which has resulted in more mis-selling cases. Data from the FCA showed that between April 2015 and September 2018, 235,000 defined benefit scheme members received transfer advice, of which 69% were advised to transfer. Only 48% of these transfer recommendations were suitable.
Who has the FCA contacted?
The letters have been sent to those who transferred from a defined benefit pension after 2015, whereby their independent financial adviser (IFA) provided unsuitable advice and are now in liquidation.
Former members of the British Steel Pension Scheme are amongst those to receive letters. They were involved in the mass transfer out of the pension plan back in 2017, whereby around 43,000 steel workers were invited to transfer their existing DB pension into a new plan. With advisors making the new plan sound very appealing, many steel workers transferred and subsequently lost money. About a dozen of these advisory firms are now in liquidation as a result of unsuitable advice.
Mis-Sold pension transfers and SIPPs
Whilst IFA’s can advise investors to transfer from a DB pension to a variety of different pension products, transfers to SIPPs (Self-Invested Personal Pensions) are becoming more and more common. SIPPs allow investors to have the freedom to use a wider range of investments and products to grow their pension fund. This level of freedom is what often attracts investors.
However, SIPPs are not suitable for everyone. In recent years, there have been many reports around unscrupulous SIPP advisors and providers. Some IFA’s have failed to conduct thorough background checks on SIPP providers resulting in investors transferring to either an unregulated or unsuitable pension product. The lack of clarity some advisors have provided to investors has also meant that they were unaware of the risk level involved, which subsequently meant they lost money.
Fortunately, there has been a major crackdown on SIPP mis-selling, especially in cases whereby the investor was wrongly advised to transfer from their DB pension to a SIPP. Even so, mis-selling still occurs, and investors should still be cautious when deciding whether to transfer or not.
Have I been mis-sold to?
If you’ve transferred your DB pension into another pension scheme and lost money as a result, you could be owed compensation. Here are some of the common tell-tale signs of pension transfer mis-selling:
- The risks were not explained to you properly
- The pension product was not clearly explained to you
- You were pressurised to transfer
- Your attitude towards risk wasn’t assessed
- You weren’t presented with a list of options
- Your financial goals were not considered
If any of the above sounds familiar to you, and you lost money as a result, you could be a victim of pension mis-selling. To find out if your eligible to make a claim, contact Goodwin Barrett today. We’ll investigate your case and let you know if you’re in a position to claim. Call us today on 0808 163 1659 today or email us at firstname.lastname@example.org.