As part of its recent review into pension switching advice, the FSA found some of the six providers it visited were overstating return projections on cash. It has pledged to pursue the firms concerned and is considering a wider review of compliance in this area.
The report states: “We were concerned some providers seemed unlikely to be complying with the requirements to use lower projection rates.
“We saw cases where providers used the standard 5, 7, 9 per cent rates of return to project for cash funds. We are pursuing our concern.”
Standard Life and Legal & General project cash at lower rates while Aegon uses lower rates for cash accounts within its Sipp.
A Scottish Widows spokeswoman says: “Cash is often used as a short-term holding when markets are expected to fall. The projection rates therefore reflect the likely longer-term investment mix.”
Syndaxi Chartered Financial Planners managing director Robert Reid says: “We are trying to make this industry more professional, it is about time the providers joined in.”