The FSA’s review of post A-Day pension switching advice found unsuitable advice was given in 16 per cent of the 500 cases it looked at from 30 firms. Although, a quarter of firms were found to have unsuitably transferred their clients’ pensions in a third or more cases.
Which? personal finance campaigner Dominic Lindley says the worst offenders should be highlighted to protect consumers and ensure all adviser firms are not tarred with the same brush.
He says: “We would like the FSA to publish the names of the firms that performed the worst. It is not really fair to tar everyone who has been offering pension transfer advice over the past two years with the same brush. And also it might help people come forward, if they have been sold by one of these firms they might have concerns about it and this would increase their chances of at least asking for a review of their case. The quicker these people are dealt with the less likely we will end up with problems in ten years time.”
Lindley says firms with a third or more cases found to involve misselling should be made to review every sale made in the past two years to ensure no customer who has been misold misses out on compensation.
He says: “I think what is shocking is that in some firms more than a third of their pensions had been misold. From a consumer’s point of view, if firms have got that level of misselling they really need to think about reviewing every single one of their sales over the past two years. It is vital this is nipped in the bud now.
“The review found that in 79 per cent of cases clients were transfered to a more expensive pension. We do not know what the scale of the extra charges in those pensions was because the FSA has not told us yet but if we are talking 0.2 per cent per year, if you have 20 years until retirement it can add up to thousands of pounds if you do not realise it. That is why if you reviewed it now and compensated people or transferred them back into a cheaper pension then you can really stop this problem developing.”
Which? has also waded into the debate about bringing group personal pensions under the remit of the Retail Distribution Review.
Lindley says: “If a consumer is going to be auto-enrolled into a group scheme and the GPP is being sold on a commission basis by an adviser and the consumer ends up paying commission to that adviser even though they are not actually receiving any advice, it is questionable why they should have to pay the extra money. The FSA needs to look into this.”