IFAs and tied agents are not making the difference between personal and stakeholder-friendly pensions clear, according to findings from a mystery shopping exercise carried out by the PIA.
But IFAs have blamed product providers, who they say are masquerading their products as stakeholder-friendly pensions when they do not meet the criteria of the new scheme.
The survey of 100 firms selling personal pensions and Isas found that in some cases advisers suggested to clients that past performance would be repeated in the future, which is contrary to PIA rules.
The regulator also says that at times the fact-finding process was either incomplete or the necessary information was not obtained from the investor until after advice was given. Attitude towards risk was not always discussed. On Isas, past performance was often used to overstate projected performance, breaking a previous regulatory update.
The mystery shopping exercise was carried out in two phases and concentrated on 50 IFA and 50 tied adviser companies in the run-up to stakeholder next month.
The PIA says: “The personal pensions recommended were usually portrayed as being equivalent to stakeholder schemes, even though the terms of the personal pensions were not necessarily as beneficial.”
IFA Torquil Clark pensions development manager Tom McPhail says: “I continue to have concerns about product providers selling personal pensions pretending they are stakeholder. The PIA's conclusions do not surprise me.”