Mis-sold pensions scandals have rocked the financial sector for a few years now, and it’s likely that mis-selling of defined benefit (DB) pensions transfers will become another big scandal in the making from 2020 onwards. If you’ve transferred your DB pension in the past, this brief summary offers useful advice and information about mis-selling to help you gauge whether you may have a valid claim.
About defined benefit pension transfers
The marketplace for DB pension transfers has grown in recent years, and several mis-sold pensions claims have already been processed. For example, in late 2017, members of the British Steel Pension Scheme were advised that they would need to shift DB pensions or switch them over to the Pension Protection Fund due to the closure of the existing British Steel scheme. Many existing workers opted to transfer their DB pensions into risky pension pots after seeking professional financial advice from a range of providers, including the firm Active Wealth. The Financial Services Compensation Scheme (FSCS) received a total of 77 claims regarding Active Wealth and compensation to a total sum of £1.8mn was paid out to 61 individual claimants. Active Wealth is no longer trading. Other claims against different financial advisors are ongoing.
Defined benefit pension transfers could be the emerging mis-sold pensions scandal for 2020
Speaking at the Annual Conference for the Personal Finance Society in December 2019, Fiona Tait from Intelligent Pensions warned that the scope for claims against mis-sold DB pension transfers would be an emerging sector from 2020 onwards. She added: “As far as advisers are concerned, we’re in a bit of a limbo as what we’re still kind of waiting for is to get the feedback from the Financial Conduct Authority (FCA), so I wouldn’t rush into making any changes just yet.”
Rory Percival used to work with the pensions regulator and is now a consultant, and he said: “There already is and has been a mis-selling scandal. It’s a case of how much and where we are now or what we can do going forward to reduce the impact. Clearly there is an issue.” He also added: “. . . most people in the industry think this is an issue that’s isolated among a small number of ‘dodgy’ firms. It isn’t. It’s quite clear to me that the findings of the FCA flag up very clearly this is [also] perfectly decent firms just not doing their job well enough.”
What do you do if you’ve been mis-sold a DB pension transfer?
The UK regulation stated back in June 2019 that the recommendations to transfer away from DB pension schemes that have been provided to some people is disappointing. However, there are no guidelines currently in place. If you think a financial adviser or professional consultant has mis-sold you a DB pension transfer, get in touch to discuss the issue in confidence with our professional support team.