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Property downturn reveals pension risks

Complaints to the Financial Ombudsman Service over pension products and service dropped by 27 per cent to 3,594 for the year ended March 31 from 4,940 the previous year.

Personal pension complaints fell by 20 per cent to 1,727 from 2,173 although the products still received by far the most complaints of all pension products.

New cases relating to Serps fell by 61 per cent to 560 from 1,468 while annuity complaints fell by 18 per cent to 501 from 611. Sipps and SSASs saw a 27 per cent increase to 475 from 373 while income-drawdown complaints increased by 21 per cent to 158 from 130.

The FOS says it has continued to get pension-switching complaints, adding it “takes into account the issues identified by the FSA when investigating a complaint that turns on the suitability of the advice to switch”.

The tougher economic environment has affected the type of pension-related complaints. It says the fall in the value of investments linked to commercial property has shown that many people did not fully understand investment risk and could not afford to take risk with their pension funds.

Proportionally more cases were referred to an ombudsman for a final decision where the dispute related to pensions and investments. It says this reflects the complexity of these disputes, the fact that a bigger amount of money is often at stake and the socio-demographic background of the people involved.

Nearly half of all complaints about pensions were directed at life insurance and investment providers while IFAs received 28 per cent of complaints, banks 10 per cent and others, including building societies and stockbrokers, 14 per cent.

Cases involving unit-linked bonds rose by a third to 2,453 from 1,824. Investment Isas saw a 6 per cent increase to 1,301 from 1,221 and structured product cases increased by 34 per cent to 273 from 203.

Overall investment complaints rose by 9 per cent to 6,329 from 5,798. Whole of life and savings endowment complaints rose by 19 per cent to 4,199 from 3,515.


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