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Thousands duped out of pension savings by rogue advisers

Rogue advisers have caused savers to lose hundreds of thousands of pounds after being abandoned to a “Wild West” of pension rules, according to a Sunday Times report.

Its report shows how some advisers have exploited the outdated laws and loopholes to lure unassuming investors into high-risk products, leaving them unprotected when dodgy bets have gone wrong. Some laws have not been updated since 2003, despite the way pensioners can access their savings changing in 2015.

The advisers can continue to operate as before despite mis-selling products, while investors have been unable to claim full compensation.

As such, around 4,300 – the equivalent of 18 people a day – are being forced to seek help from the Financial Services Compensation Scheme.

Pensions regulator promises tougher oversight for workplace schemes

Latest figures have shown that almost £19bn was moved out of pension schemes in the first six months of this year, after a record £34.2bn was transferred last year.

According to the Sunday Times, more than three savers a day are receiving the maximum £50,000 payout from the FSCS, while 1,500 investors had complaints about their mis-sold pensions kicked out because they did not report the problem early enough.

Former pensions minister Baroness Altmann told the Sunday Times: “It is not acceptable for people to be exposed to a ‘Wild West’ in financial advice, where they may unsuspectingly use an adviser who has just joined a new firm straight after walking away from compensation claims [for advice] that left a trail of destruction and loss for previous customers.

“There needs to be a reliable record of names, qualifications and expertise of all independent financial advisers, with the ability to strike people off the register or place cautions next to their names that will reflect past problems,” she added.

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As things stand, investors can make a claim against an adviser through the Financial Ombudsman Service, which has the ability to award up to £150,000 plus interest, but only if the firm has not shut down. If the firm has closed, any compensation claim gets passed to the FSCS. However, the financial adviser is able to set up a new firm under a different name – known as phoenixing.


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. “Its report shows how some advisers have exploited the outdated laws and loopholes to lure unassuming investors into high-risk products, leaving them unprotected when dodgy bets have gone wrong.”

    “The advisers can continue to operate as before despite mis-selling products, while investors have been unable to claim full compensation.”

    And this is despite the FCA and its predecessor spending billions on tightening regulations, updating rules and generally imposing more requirements, restrictions and costs on advisers. Perhaps, just perhaps, the money could be better spent elsewhere… policing the perimeter rather than forever legislating.

  2. Ah, pension freedom. The freedom to get ripped off. Much harder if freedoms didn’t exist and the old annuity route was the only one.

  3. If people think that this story isn’t bad enough, its nothing compared to the fact that, via the bail out (industry levies) from the FSCS, the good clients of the good advisers and their companies are footing the bill.

    Yes it is right and proper that there needs to be a lifeboat scheme, but it is wrong it is levied to the industry (indiscriminately)where ultimately this cost is passed on the the client !

    The FCA and (it has to be said) the government have failed, are failing and will continue to fail simply because they don’t give two hoots, they are not accountable…to you, me or the consumer !

  4. We have a register of firms, and of individuals. Just update it with a simple number of ‘upheld complaints in the last 10 years’ figure. Or whatever way of slicing it suits the regulator. Such things should not be confidential, and they should include complaints upheld after an adviser has jumped ship to a new home, so closing that potential gap.

  5. My previous financial adviser is currently in jail for defrauding the Inland Revenue. He scalped me for over half a million quid and his tactics included forging sophisticated investor documents. I have not had a penny compensation because of obscure time limitation rules that nobody told me about. Having cancer treatment and surgery was no excuse for missing these deadlines. The firm of financial advisers of which he was a board director is still going strong and making millions out of mugs like me.

    They do not give a XXXX as long as they get their cut.

  6. Just what the public needs. Another scare article designed to make them mistrust the adviser community, and think they can self navigate.

    Remember what lawyers say about a client that represents themselves.

  7. It is rather ironic. Freedoms were touted on the basis that people were intelligent and astute enough to have access to their own money. What with these scams and the unhealthy withdrawal rates it would seem that is patently not the case.

  8. With proportionate and appropriately targeted regulation, many if not most of these horror stories could have been avoided. The regulator has failed shamefully to fulfil its statutory responsibilities. Yet nobody is ever held to account.

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