Mis-sold Pensions Explained
Mis-selling is a situation where a person purchases a product or service that ends up not being right for them. This is as a result of the seller giving insufficient information regarding the product either deliberately or otherwise. Mis-sold pension is where a person is advised to move from an existing scheme which they had found to be fit for their needs and known the risk, to a scheme that does not fit or suitable for the person’s needs and demands.
The person who is supposed to advice on a pension scheme is a regulated financial adviser regulated by the Financial Conduct Authority (FCA). However, some people who provide this advice despite not being authorized to do so by the FCA. There are several ways that someone can experience a mis-sold pension. Examples are in mis-sold SIPP (self-invested personal pensions) and annuities that promise huge returns to the investor.
This is a self-investment where a person uses their pension money to invest in various funds. The objective of doing this is the notion that the funds will increase in value after some time giving the investor good returns for their retirement. Advice on which SIPP pension to invest in should be provided by a qualified financial adviser authorised by the FCA. One is said to have a mis-sold SIPP if the financial adviser withholds some information concerning the investment.
An annuity is a financial product that a person purchase’s intending to reap its benefits on retirement. The person hands over their pension to an annuity firm with the guarantee of receiving an income till they die. In some cases, the person buying the financial product receives a product that’s unsuitable for them or is provided with inappropriate information to make them purchase the product. This is a case of a mis-sold annuity.
Another way that a person can be misled is through mis-sold final salary transfer. Mis-sold final salary transfer where one is advised to transfer their final salary pension into a scheme that promises better returns. Generally, final salary pensions are beneficial to the owner thus the reason “financial advisers” mislead the pensioners into opting out of the scheme and moving to their preferred scheme.
How do you know you have been misled?
- First, your financial adviser should offer you a personal recommendation. This means that the pension introducer should consider your financial responsibilities and circumstances and give you professional advice based on this information. The financial adviser should not give you generalized advice as it may not suit you; he should provide you with defined benefit pension across various options.
- Secondly, the pension introducer fails to provide you with the option of continuing with your workplace pension plan. A financial adviser should explain the various pension options available and also explain the implications of taking each one of them.
- Thirdly, you may be advised to transfer your pension scheme from your pension provider even when you do not intend to leave your current employer. This is a violation of financial regulations as you had no intention of leaving your current pension provider.
- Fourthly, if your financial adviser only advice you on a single option without letting you explore more options and giving you a defined benefit pension; this is pension mis-selling. This usually happens when the adviser wants you to buy into a particular scheme because he stands to benefit from the transaction.
How to make pension claims
You can make pension claims against pension providers. Contact a reputable and authorized financial services firm to get claims advice. It is advisable not to pursue pension claims on your own and get claims advice from those who better understand financial matters. All you have to do is provide them with documentation of the transaction and oral narration of what you understood the investment to be.
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