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Advisers targeted by ambulance chasers over DB transfers

File image of people meeting in officeAdvisers are being targeted by claims management companies offering payment for referring complaints related to defined benefit pension transfers.

Capital Asset Management chief executive Alan Smith was sent a letter this month from Birkenhead-based firm Pension Justice, which claims to be a “missold pension compensation specialist”. The letter asks advisers if they have seen clients who have been poorly advised on a DB transfer, or seen Sipp statements with unauthorised investments.

It says the adviser will get a referral fee or 30 per cent plus VAT of any successful claim Pension Justice makes. The adviser would keep the client for their own business. The letter says one Glasgow adviser has been paid more than £15,000 in referral fees over the past nine months.

Smith says: “Clearly claims management companies are on the rise and they appear to be on the front foot going to IFAs directly and seeking to engage with their clients.

“The payment protection insurance scandal was a watermark but this is coming to an end and so they are looking for a new opportunity.”

In June 2017 consultants Mercer calculated 210,000 DB members had cashed out a combined total of around £50bn since the pension freedoms started in April 2015.

Smith adds: “We have seen such a large number transferring their pensions to Sipps in the past two or three years, which is fine as long as there is no market correction. As soon as there is a market downturn, which happens every five or seven years, a lot of people who know no better will try and make claims. These claims could be bigger than PPI.

“The very IFA companies that might have slightly shady practices may benefit from this at the expense of the good ones.”

The Pension Justice website says it can pursue claims relating to transfers from a Sipp or workplace pension scheme and non-standard investment, as well as annuity misselling, overcharging and free-standing additional voluntary contributions.

The government is consulting on proposals to strengthen the regulation around claims management companies by having seven permissions for claims firms instead of one.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Robert Milligan 25th April 2018 at 1:40 pm

    That Glasgow adviser should be De- Regulated, investigated and individually rebate his received fees directly to the client, The FCA should look into the firms records as if he has “Not” completed a Fee of Charge FOS application they should go to jail, and I mean today not next year.

    • It’s certainly questionable whether the adviser has acted in the client’s best interests.

      In most cases the CMC will be sending the case to the FOS on behalf of the client.

  2. Robert as usual the horse will have bolted before the fca take any action

  3. Surely illegal under GDPR in a month’s time.

  4. This truly is the ‘profession’ that eats itself.

    Given the drive to make FS advice a profession post RDR, I can think of no example (happy to be proved wrong) where regulated professsional firms work with the very CMC industry they despise for personal gain.

    Not the regulator, not the FOS but CMC’s.

  5. One can hardly blame the CMC’s after all it is a sound business decision.

    One may question the advisers, feeding these people, they should be sending them direct to FOS if they feel their client has been wronged, but the prospect of easy money may well swing their decision ? minimum input maximum output.

    The real fault is one of the big grey elephant (s) looming in the corner of the room ….

    FOS -: we know they don’t have the skill set or knowledge to determine decisions correctly, fairly and without bias, (it must be said for either party) just asking Google is NOT a basis to make a ruling.
    FSCS-:just hands our clients money out like confetti, (we are sorry you fell over and grazed you knee he have some money, we have access to an endless supply.)
    FCA ….well ? what can one say about the good ole F.C.A the stable door is forever just swinging in the breeze blaming the industry for the horse in the field, not accountable for its own incompetence and ignorance.

  6. If the investor lives in England or Wales then the adviser will need to be regulated to introduce the business to the claims chaser – regardless of where the adviser is based.

    And regardless of where the adviser is based, if they are seeking to effectively charge the investor to make a complaint against themeselves that is a breach of TCF Outome 6.

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