Many advisers and probably former advisers who have gone out of business will share the view that at least a proportion of complainants in both reviews were suffering from what they might kindly describe as false memory syndrome.
However, they will be amazed to hear that one of the architects of the pension review and a former PIA director agrees with them.
Lipsey, a Labour peer, did not make the remarks from a platform but as an audience member at a Social Market Foundation fringe meeting at last week’s Labour Party conference entitled, How generic is generic advice?
Lipsey was warning that generic advice which leads to the recommendation of a product by another adviser could still lead to complaints.
He said some of those compensated in the pension review “knew it was in their interest to forget what had happened to them”.
Lipsey said: “My own experience of dealing with the pension review, and this is also true of endowments, is that we were successful in getting people to come to us but they were not always truthful. A lot of them had been sold pensions perfectly validly and they had either forgotten what happened or they remembered but knew it was in their interest to forget what happened to them.
“A large number of people have been compensated, some of them rightly, some of them wrongly, and I think there was an erosion there of a duty of moral hazard on the part of the purchaser.”
Ten or perhaps even five years ago, his remarks would have been dynamite but do they now simply serve as the confirmation of something many advisers already know?
At the time of the pension review, then IFA Association chief executive Garry Heath was marked out as a pariah by successive Treasury ministers such as Helen Liddell and Patricia Hewitt because of his opposition to parts of the review process.
Heath says: “Praise the Lord, at last someone has admitted it. It is a pity it is not going to feed into policy but I wish I was hearing it from Helen Liddell or some of the others. It might mean we could get caveat emptor. Now we have this huge civil service bureaucracy taking a lot of money instead of it going to policyholders. This was what my fight was all about in 1999 and 2000.”
Baigrie Davies director Amanda Davidson, who sat on the PIA board with Lipsey, says: “I know David and he is a very considered, deepthinking man. I think it is extraordinary that he has come out with this now but I wonder if he has evidence. The problem is you never have proof. There has not been the documentation with advisers and certainly not with providers. Unless you can prove it, it is only a gut feeling that someone is not telling the truth.”
The Financial Ombudsman Service was not involved heavily in the pension review but is behind many awards of endowment compensation. Spokeswoman Emma Parker points out that only one in six complaints get through to the hearing stage but says she does not think many consumers are lying outright.
She says: “We do not see it as cynically as that. Most consumers believe they have a genuine complaint. If there is a malicious complaint, it either does not get through the sifting or, if it becomes clear, we do not charge for it.”
Aifa deputy director general Fay Goddard says whatever the rights and wrongs, most of the pension review issues are now in the past.
She says Lipsey’s warnings on generic advice are very pertinent and underline the need for any generic advice service to be scrupulously impartial and not come close to personal advice. She is particularly concerned that a generic advice service should not be able to deal with opt-ins or opt-outs from personal accounts.
IFA Defence Union chief Evan Owen, who is currently battling with the FSA in a bid to get it to release the details of the Lautro 12, does not mince his words.
He believes the endowment review is the bigger issue now. “Do not forget that the Lautro rates were used to set the critical yield calculations on pension transfers. I have always argued that the pension review was more to do with that than anything else. The Government wanted a full-blown endowment review until it discovered that the life offices were going down the pan over the pension review.
“Nothing surprises me anymore. They know precisely what goes on and allow it to be the ruination of innocent advisers. What do the providers do? They sit behind their potted plants waiting for retirement while milking the poor souls in the with-profits funds to bolster the balance sheet so that their shares increase in value.”
FSA spokesman Adam Richards-Gray says redress is not a right for people who think that a product has not done as well as it should have but it may be available to those who have not been given the right explanation of risks associated with their product. He says it is up to the ombudsman to decide on the merits of individual cases.