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FSCS boss: Bad DB transfers will drive up levies

Mark-Neale-at-office-in-2014-700.jpgFinancial Services Compensation Scheme levies for the coming year will reflect the growth in claims from poorly advised defined benefit pension transfers, chief executive Mark Neale has said.

In a blog published this morning Neale writes that the levies – to be published in April – will show the claims to do with pensions have been rising for some time.

These mostly concern bad advice to move pension savings out of an occupational scheme and into a Sipp in order to hold risky and illiquid assets.

Neale linked the risk of DB transfers to a series of studies commissioned by the lifeboat fund which found that awareness of the FSCS is likely to lead to less risky product choices and greater sales of regulated products covered by the scheme.

Advised clients are particularly likely to think the FSCS is important, but are also less likely to question the cost of that advice if they are aware of the FSCS’ protections.

However, only 23 per cent were aware of the compensation limit for pension claims, and 61 per cent discussed the scheme only when their client prompted them.

The FSCS has established a new working group from the industry to look at how information on the FSCS should be disclosed to consumers to see if a standardised format can be reached.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Accepting that we need consumer protection as it is very valuable to underpin the advice we give, these constant claims on the FSCS for advice on these suspect areas such as sipp investments and dodgy investment schemes need to be stopped once and for all.

    The regulations need to change so that the good are not funding the bad advisers, the claims should be placed againt the adviser as well as the directors of the advising company responsible for the advice, with a set limit of financial liability also applying before claims fall on the FSCS. This would prevent phoenixing and also the advisers will eventually be flushed out completely. I cannot understand how these advisers can bee demmed fit and proper when re-applyin for their FCA registrations, it makes a mockery of our industry. Come on FCA, tweak the rules and where complaints sit, the bad advisers will then think twice about doing something that is completely wrong!

    Anyone agree or do I have too much commons sense?

  2. Does the levy also reflect the fact that FSCS pays contractors around £300 a day (never mind the cut from the contractor’s agency and the top 4 consultancy at the top of the chain)? And, invariably, regardless of circumstance the cases are always upheld. FSCS does not make decisions on the merits of a case. It is simply there to work out how much compensation is owed to consumers.

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