The pension industry is desperately trying to fend off an FSA investigation into contracting out of Serps which sources say could cost IFAs and insurers up to 2.8bn in compensation.Money Marketing understands that product providers are lobbying for a voluntary review of contracting out to avoid a full pension-review-style investigation and the prospect of further retrospective regulatory action. Although the FSA found no evidence of widespread misselling in its initial investigation, it is understood that the regulator now wants to conduct a further review as it believes that between 1987/88 and 1996/97, 200,000 to 250,000 people contracted out of Serps despite being above the pivotal age. The pivotal age is the age over which it is considered too risky to contract out and was typically 40 for women and 45 for men at the time. Research commissioned by the FSA last year showed losses for a 50-year-old man who contracted out between 1987 and 1997 could be 17,695 and 9,952 for a 45-year-old man. If the average compensation is 14,000 and 200,000 people were compensated, the cost could reach at least 2.8bn. Scottish Widows head of pensions market development Ian Naismith believes the majority of sales were fair but warns that the poor quality of sales documentation in this period could place firms at risk of misselling claims. The FSA, which has pledged to avoid retrospective action, is understood to be holding a board meeting shortly but says it will not announce anything until next year. A source says: “Yet another review to go with pension misselling and endowments would be a big financial cost to the industry and a PR disaster. The industry is trying to head this off at the pass by agreeing to review these cases without being formally ordered to do so.” Which? principal researcher Teresa Fritz says: “It would not be satisfactory for the industry to conduct its own review. We would want a full-scale review but, failing this, we need compensation levels to be sorted out as compensation levels in the pension review were inadequate.” Informed Choice managing director Nick Bamford says: “SIB concluded in 1996 that the vast majority of people who contracted out of Serps were massively advantaged.” Comment, p49
George Osborne has rejected calls to cut taxes from the right of the party, claiming that there is “no such thing as a tax-cutting Shadow Chancellor”. Speaking at a Cicero Consulting and Policy Exchange fringe event on Sunday, Osborne said it would not make any sense to propose tax cuts three years before the party […]
HBOS has reshuffled its senior management, with mortgages director David Nicholson taking over as retail distribution director. A replacement is expected to be announced shortly. Nicholson replaces Rob Devey, who is moving to HBOS’s insurance and investment unit. A group of former Alexander Forbes directors has set up a professional indemnity brokerage for IFAs. Prime […]
Law Commission proposals would introduce non-contestability after three years
Pink Home Loans managing director Tony Jones (pictured below) has an alternative career in the entertainment industry if it does not work out for him in the mortgage market. He almost upstaged the excellent after-dinner speaker – Match of the Day 2 host Adrian Chiles – at his network’s service awards last week. Not one […]
Last Wednesday was International Youth Day: a UNESCO (United Nations Educational, Scientific and Cultural Organisation) initiative that began in 1999.
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Claims management companies must be more specific on separate permissions and competency when they under the remit of the FCA, according to HM Treasury. Under rules proposed in the Treasury’s latest consultation paper, claims management companies will operate under six sectors – housing disrepair, industrial injuries disablement benefit, personal industry, financial products and services, criminal […]
Knowing what assets each operator will accept and with what conditions is becoming increasingly difficult The recent well-publicised events concerning Sipp operator asset acceptance have focused the mind of a number of advisers. We have been fielding enquiries about our own Sipp and the asset classes we as a Sipp operator would consider. But this […]
Investment trust sales may come under pressure due to new EU rules, experts have warned. The potential benefits of gearing on investment trusts risk being overlooked as new cost reporting rules make them look more expensive compared with open-ended funds. Traditionally, closed-ended funds have looked attractive based on lower costs compared with other structures, as […]