After working so hard to build up your pension pot, it’s scary to think that every penny could be lost overnight. Unfortunately, this is a very real consequence of pension scams and mis-sold pensions.
In 2018, the Financial Conduct Authority (FCA) found that the average sum of money lost in a pension scam was £82,000 - equivalent to over 20 years’ worth of savings. Nearly a quarter of these pension scam victims took less than 24 hours to agree to the offer they’d been made. Tens of thousands of pounds lost overnight.
Financial scams and mis-selling scandals involving pensions are rife across the UK. So much so that the number of mis-sold pension claims is doubling every two years. So what is the FCA doing about it? Read on to find out more about the FCA’s reaction to pension mis-selling, what FCA pension warning notices are and what they mean for you.
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A pension scam is an obvious form of pension mis-selling - malicious, cruel and undoubtedly a crime. But pension mis-selling doesn’t have to be as explicit as this.
Something as simple as an inexperienced financial advisor offering confusing or misguided advice when recommending you a pension plan also counts as mis-selling. While not as sinister as an out-and-out scam, it can be just as harmful if your hard-earned retirement fund is locked away in a high-risk investment.
Yes. The simple fact of the matter is that if you have been mis-sold a pension or mis-advised about a pension transfer, then you have every right to compensation. There are very strict regulations when it comes to financial mis-selling as we saw with the PPI mis-selling scandal.
One of the benefits when it comes to financial transactions such as pension advice is that very often there is a detailed paper trail. This ensures that any mis-advice given with regards to your pension should be relatively easy to identify.
Pensions are likely to be the biggest financial asset many of us own. As such, making sure the pensions and retirement income sector is properly regulated is a key focus of the FCA.
Firms need special permission from the FCA to advise on pension transfers. If anyone doesn’t seem to be meeting the high standards set, the FCA has the authority to investigate them and take action to prevent any customers from coming to harm.
In 2018, the FCA found that only 60% of financial advice given by firms about transferring workplace pensions into personal schemes was deemed to be ‘suitable’. So what does that mean for all those companies not playing by the rules?
If a firm is found to be putting peoples’ pensions at serious risk, it’s likely they’ll be issued a warning notice from the FCA.
There are a few situations in which this might happen:
The next steps depend on the decision made by the FCA’s Regulatory Decisions Committee. Fines can be issued, criminals charged and a firm’s FCA authorisation can be revoked, meaning they are no longer able to provide FCA regulated services such as pension advice.
In short, no. As a customer, you won’t be told if your pension provider or financial advisor is sent a warning notice from the FCA. You can, however, find enforcement actions on the FCA’s website with the details of all actions taken against a company.
This means that it is on you as someone with a pension to keep it out of the wrong hands. When it comes to pension scams or mis-selling, prevention is a lot easier than a cure.
The FCA has various recommendations and resources to help you protect your pension pot. Knowing how to protect yourself from a pension scam or mis-selling is a good place to start.
The FCA’s Warning List is a tool to help you spot whether an investment opportunity is actually a scam. This is a list of firms or individuals known to be operating without FCA authorisation. If you deal with someone unauthorised by the FCA, your money is at risk.
Just because a firm doesn’t show up on the FCA’s Warning List doesn’t automatically mean they aren’t scammers. Check the FCA’s Financial Services Register to make sure they’re authorised first and are allowed to provide you with the service they have promised you. Also double-check the contact details the FCA holds on the firm you’re using - this can stop you from getting in touch with a ‘clone firm’ who are scammers pretending to be someone else.
If you think you’ve been mis-sold your pension plan, you could be owed compensation. Some common signs of pension mis-selling include:
If any of these sound familiar, you can make a complaint to the pension provider or contact the FSCS or Financial Ombudsman Service for further support. You may also want to seek legal advice as to the best way to make your claim for compensation.
As a pension pot is likely to be the largest financial many of us have, they’re also a prime target for scammers to go after. Knowing what to look out for in a pension scam can help keep your money safe. Watch out for:
The golden rule of pension scams: If it seems too good to be true, it probably is. Approach these opportunities with caution and suspicion and always report the scam to the FCA using ScamSmart and Action Fraud if you’ve been affected.
It is very important to remember that in order to claim compensation, first of all, you need to prove negligence. As a consequence, you will need to provide evidence to show there was misinformation/mis-advice given regarding your pension.
This could include:-
In reality, no two cases are ever the same and may involve different elements of evidence. However, the above list gives you an idea of what information will be required whether you pursue via the financial ombudsman or your own personal injury claims adviser.
While there are formal ways in which you can pursue compensation yourself, this can be something of a legal and technical minefield. As a consequence, many people look to employ the services of a claims management adviser to help secure the maximum amount of compensation possible. If, after reviewing your evidence, a claims management adviser believes you have a minimum 60% chance of success, they will likely offer likely you a “no win no fee” arrangement.
This will indemnify you from costs incurred by the adviser when pursuing your claim. However, in exchange, they will look to negotiate a “success fee” which is traditionally around 25% of any compensation awarded.
Unfortunately, we can only estimate how many perfectly valid pension mis-selling compensation claims have fallen by the wayside due to a lack of advice and information. It is important to remember that mis-selling with regards to pension transfers and pension contributions can have a huge impact on your final pension pot.
This is the money that will see you through your retirement years, and it is important that you protect your funds and maximise the long-term gains. Even if you have “agreed” to certain actions which turned out to be incorrect, this was done under the advice of a qualified practitioner. Just because you have “agreed” does not remove any element of their duty of care to customers.
Also, unless negligent third parties are held to account, then the mis-selling of pensions will continue into the future, and there will be many more victims. It is only the threat/consequences of paying out compensation that will force many financial advisers to adjust their procedures, improve their training and avoid similar incidents going forward.
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.
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