Not only has the number of individuals claiming pension misselling compensation doubled in the past two years, but payouts achieved have virtually doubled too. The FSCS (Financial Services Compensation Scheme) state these claims for compensation are now at a record high, and payouts in 2018 alone amounted to over £40mn, an increase from £37.5mn for 2017. The 2018 compensation payouts were actually double 2016 payouts of £20mn and related to around £10bn of pension funds mis-sold to consumers.
Concerns over the advice given to pension holders have been expressed for some time, and many sector experts believe that compensation paid out within the pensions misselling arena will amount to substantially more than total PPI payouts made.
It’s not just financial advisors that are contributing to consumer dissatisfaction within the pensions marketplace, however. Both pensions and SIPP providers are being scrutinised for suitability and effectiveness, while many consumers taking pension drawdowns are opting to retain their money in cash or cash investments as opposed to switching to different pensions providers.
What’s being done about this?
The FSCS has been reviewing the entire pensions landscape along with The Pensions Regulator, and one significant finding was that around one-third of people taking pensions drawdown without any independent financial advice were investing heavily in cash which is likely to result in substantial losses.
The non-workplace pensions marketplace affects one out of every four individuals in the UK and has a total assets value of £400bn. It’s likely the FSCS will announce measures to reduce levels of consumer harm in this field in the future. During 2019 and 2020, the watchdog is monitoring and engaging with all pensions providers in the UK in order to assess their suitability within this marketplace.
The Annual Report and Accounts for the FSCS for the year to March 2019 are available online and the most topical issues and concerns within the pensions sphere are discussed in detail, alongside information about the reviews and regulatory solutions that will be put in place to alleviate any problems.
If you’ve been a victim of pension misselling, let Pension Justice be your guide to all the most important news and issues surrounding this marketplace. We can help you finalise any claim for compensation for your mis-sold pension and ensure your claim is handled quickly and effectively by the FSCS. Get in touch to find out more.