Compensation for Bad Pension Advice

Mark Benson

Mark Benson

Money Savings Advice Compensation for bad pension advice

Are you one of a growing number of people who have suffered from bad pension advice? Perhaps you are considering a complaint to the ombudsman and an application for compensation?

There are a number of factors to take into consideration when seeking compensation. So, where do you start?

A quick glimpse of the Internet will give you an idea of where to start, but with complex matters such as pension transfers, it pays to take advice. Remember, bad pension advice in the early days can cost a fortune further down the line.

Indeed, in many cases, it is years later before the individual realizes that the advice they were given was inappropriate for their situation.

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Who Can I Complain to About Bad Pension Advice?

The first port of call should be the Financial Ombudsman Service. A handler/adjudicator will normally assess your claim and provide informal feedback to all parties. If the review is accepted by all parties, then the Financial Ombudsman Service would make a ruling on compensation.

However, if the claim was rejected by one or more parties, then the Financial Ombudsman Service would undertake a more thorough investigation.

What Role Does the Pensions Ombudsman Play?

On occasion, the Financial Ombudsman Service will forward a complaint to the Pensions Ombudsman, where they believe it is more appropriate. The process is the same, evidence will be sought, reviewed, and a final decision announced.

These more complex reviews can take some time even though a recent EU directive suggested they should take no longer than 90 days. Unfortunately, this is not always possible.

Does the Financial Adviser Need to Abide by the Final Decision?

Yes. You will normally receive compensation within 28 days of the final ruling. If for some reason, there is a delay, you should return back to the Financial Ombudsman Service and update them.

The final ruling will then be put through the courts for a legal stamp of approval. At this point, you should return to the financial advisor in question and inform them that there has been a legal rubberstamping of the final Financial Ombudsman Service decision.

What Happens if the Financial Adviser Refuses to Pay Compensation?

As the final decision has effectively been rubberstamped by the court, it is now a legal requirement to submit compensation for the claimant. Therefore, failure to do so would see the financial adviser forced to attend court.

What Happens if the Financial Adviser Has Gone Out of Business?

The Financial Services Compensation Scheme is there to assist those who are given bad financial advice, where the defendant is no longer trading. There are three specific pension scenarios where you may be entitled to compensation up to £85,000.

If the firm fails after 1 April 2019, you may be entitled to compensation of:-

  • Up to £85,000 per eligible person, per firm where bad pension advice was received
  • 100% of your claim, with no limit where your pension provider fails
  • Up to £85,000 per eligible person, per firm where your SIPP operator fails

These are last resort scenarios, where the companies involved are no longer trading and unable to pay compensation. The Financial Services Compensation Scheme is funded by contributions from financial service operators in the UK. It is fair to say it has proven to be an extremely useful safety net for many people.

Should I Employ the Services of a Claims Management Company?

As we touched on above, many claims management companies have experience right across the financial markets. Even where they lack in particular experience/knowledge, they will no doubt be able to call upon colleagues or contacts to assist with your claim.

While the claims process is relatively straightforward, the challenge is to provide the type of evidence required and how to present it in its most favourable light. So how do you appoint a claims management company?

Collate Your Evidence and Approach a Claims Management Company

The first thing to do is gather as much evidence as possible to support your case for bad pension advice, with an appropriate compensation claim. If a claims management company believes you have a minimum 60% chance of success, they will likely agree to take on your case. This will probably be on a “no-win, no fee” arrangement, which effectively indemnifies you from any costs incurred pursuing your case.

In exchange, the claims management company will request a success fee, which is traditionally around 25% of any compensation awarded. These are issues that should be agreed upon before commencing work on your case.

Money Savings Advice Tip

Sadly where there is money involved there are unsavoury people who look to take advantage. If you feel you have been the victim of pension fraud and have lost money from your pension then we advise you to speak to a professional who can manage your claim properly.

The Long-Term Impact of Bad Pension Advice

You may have been badly advised on pension contributions or, even worse, the transfer from a defined benefit scheme to a defined contribution scheme. Many people don’t realize until many years down the line that their pension fund has been compromised by bad advice in the past.

Whether unacceptable fees, high-risk investments and or inappropriate advice on pensions in general, it can have a huge impact on your eventual retirement pot. Remember, if you start your pension scheme in your 20s, then you could be contributing for up to 60 years!

Is There a Timescale for Pursuing Compensation for Bad Pension Advice?

There are two specific timescales to consider. The first is a six-year window of opportunity from the day you received the advice/poor service, during which you must lodge your complaint.

The second is a three-year window of opportunity, from the date that you found the pension fund advice to be misleading/incorrect. As we mentioned above, very often, it can take years, if not decades, for bad advice to emerging. Even so, it is still worth trying to pursue compensation if you still have relevant evidence to hand.

How Can I Protect Myself From Bad Pension Advice?

The best way to protect your pension is to seek guidance from trusted parties. Ignore the fraudsters/scammers, who can’t fulfil promises of huge capital appreciation and bumper incomes.


More and more people are now using the services of claims management companies to seek recompense for bad pension advice, which can often prove costly in the longer term. While there are defined complaints procedures, via the Financial Ombudsman Service and Pensions Ombudsman, claims management companies can often be of great assistance.

This also brings us to the subject of annual financial reviews. You should consider all of your financial assets when undertaking a review, as it can be dangerous to look at specific finances in isolation.

How Can Money Savings Advice Help You With Making a Mis-Sold Pension Claim?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.

Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.

Money Savings Advice Author Mark Benson

Mark Benson

Mark has been writing professionally for over ten years for the financial sector. Having started in the financial world as a stock-broker in central London and then moving to equities trader Mark is one of our senior financial writers who has a vast knowledge of multiple financial sectors.

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