Following the saga of PPI, the UK is facing a new ‘claims’ epidemic – that is, mis-sold pensions.
From quarter two to quarter three of 2019, the Financial Ombudsman Service (FOS) saw a significant rise in both SIPP (self-invested personal pension) and DB (defined benefit) transfer claims. More and more consumers are coming forward – people who believe they have moved their pension pot to an unsuitable alternative, based on the poor advice given by their financial advisor.
The question is, how do you know if you’ve fallen victim and are eligible to make a claim?
What counts as mis-selling?
Essentially, a pension is deemed as ‘mis-sold’ if you:
- were given unsuitable advice
- the risks were not properly explained
- did not have sufficient information to make your decision
And, as a result of one or more of these factors, you ended up with the wrong pension product.
It’s not necessarily about whether you lost money. Even if your pension funds are currently safe, if the product isn’t right for you (e.g. it’s riskier than you wanted), you’re still entitled to make a claim. Communication is the key. For example, you can’t complain just because you took a gamble and the investment is performing badly. But if you weren’t properly informed about that gamble, or the risks involved with the pension product, you could have been ‘mis-sold’ and entitled to claim.
Tell-tale signs of pension mis-selling
1. No experience
Unfortunately, some financial advisors claim to have qualifications and experience that they simply do not have. An advisor should have enough knowledge and industry expertise to recommend the best product for you. If you find out they didn’t have this – or if they’re not who they originally said they were – you could be entitled to make a mis-sold pension claim.
2. Personal circumstances
A reputable financial advisor should ask numerous questions about your personal circumstances. To suggest your ‘ideal’ pension, they need to know more about you, your financial history, your current situation and your future plans. If they failed to ask these questions and didn’t do any initial background research to inform their recommendations, you could have been mis-sold.
3. Terms and conditions
Lack of understanding – particularly regarding the terms and conditions of your pension product – is another big red flag. It is the role of the advisor to explain these terms, outlining the most crucial details and making sure you understand the ramifications. If you’ve been left in the dark and don’t fully understand your product, you could be eligible to make a compensation claim.
4. Fees and charges
This ties in with point three. Your advisor should have made you aware of all fees and charges associated with the product, and if they didn’t, you could have been misadvised and eligible.
5. Risks
Different pension products come with different levels of risk. Again, your financial advisor should have been open with you from the start – explaining the exact risks that are associated with the pension product they have recommended. If communication was lacking in this area, and your investment is riskier than you were prepared for, you’re a good candidate to make a claim.
6. Workplace pensions
It is a very rarely a good idea to move your money out of a workplace pension. Nine times out of ten, a recommendation to do so is ill-advised – and you should be eligible for compensation.
The help of claims management companies
In line with FOS figures, claims management companies (CMC) up and down the country – such as Money and Me Claims – have also seen a rise in the number of people approaching them for help.
Such companies have significant knowledge and experience in the pension mis-selling industry. Not only can they advise on your eligibility to claim, they can also take care of the entire claims process on your behalf. Therefore, if you’re still unsure whether your pension product was mis-sold – and you’d like to know if you have a valid pension claim – a CMC could be a good place to start.