ABI plans to bail out IFAs over pension misselling has thrown open again the question of who is responsible for misselling. This is a sore wound.
Should IFAs carry the can for the Conservative Government and life offices which unleashed a wave of publicity about personal pensions which threatened to engulf IFAs? Some IFAs argue that in 1988 switching from an occupational scheme to a personal pension was the best thing to do. Is this defensible? Yes, to an extent – the problem only started to emerge six years later. But the fact remains that poor advice was given.
True, some clients who took out personal pensions were advised not to leave their occupational schemes. The problem is that the documents to support this are missing – many companies were not using full fact-finds until much later.
IFAs are crying out for actuarial help, partly because all the actuarial firms have been co-opted to the life offices. Few would object to help in this area.
But arguing that life offices have a moral obligation to rescue all IFAs is surely a grey area. That would imply that IFAs had no role in misselling. They clearly did. The problem is setting the cost to reflect this – something that the heavy-handed and complex review has not done. So, should a bail-out be limited to smaller IFAs, those firms without the resources of networks and nationals? Possibly. IFAs have a huge need for help. The life offices can give it and help put the misselling scandal behind the industry.
So far, we have had bully-boy tactics from the Government. But a blanket bail-out would be just as crazy and irresponsible.