Pensions are complex financial products – too complex for most consumers to understand, especially when making decisions about how they are managed and used for retirement planning purposes. Following the introduction of “pension freedoms” by the Government in 2015, consumers now have more flexibility in how their pensions are accessed and invested. Advice is typically obtained from financial advisers to help with those decisions. Unfortunately, this advice is not always good advice and can lead to poorly considered investments and loss of a valuable guarantee (e.g. for defined benefit transfers) resulting in a financial loss for consumers. However, consumers can pursue a claim for compensation against this poor advice if it can be evidenced that it was not suitable.
Recently, the financial regulator, FCA, discovered from its investigations into pension transfer advice (transferring away from a scheme with safeguarded benefits e.g. defined benefit pension to a flexible arrangement such as a self-invested personal pension) that over 50% of transfers were unsuitable for the needs, circumstances and fair treatment of consumers.
Similarly, there has been a rise in poor investment advice in self-invested personal pensions where financial advisers or scheme administrators have failed to act with due care, skill and diligence.
Consumers can pursue a claim directly and refer a complaint to the Financial Ombudsman Service. Alternatively, they can use a specialist claims management company, such as Congruent, who understand the complexities surrounding pensions and complaints – a ‘no win, no fee’ option may also be available following an assessment of the case.