Bad pension advice could lead to you losing some of your hard-earned pension savings. It could be given intentionally, or accidentally, but the result is typically the same. Your pension funds should work hard for you, in a way that helps your money to grow so that you’ll have what you need for your retirement.
If you’ve received bad pension advice, you could be entitled to compensation of up to £85,000. You’ll claim this from the Financial Services Compensation Scheme if you’re eligible. You’ll need to make a claim for bad pension advice you’ve received.
If you’ve been encouraged to take a product that’s not suitable, you could find that you’ve lost out financially.
What Is Bad Pension Advice?
Usually, people get bad pension advice when transferring from one product to another. Transferring your pension is something you should do with knowledge and full consideration. If you’ve been given bad pension advice, you may end up with a product that doesn’t suit your exact needs.
Many people move their pension funds at least once through their lives. Many move their pension funds more often. The best product for your needs could change with your lifestyle, your income or any future plans. There’s nothing wrong with transferring, but only if you know what you’re doing.
Bad pension advice may mean that you lose money. Your pension product might be unsuitable or could come with risks that you’re not prepared for.
If you’ve been given bad pension advice, the money that you lose could have a big impact on how prepared you are for retirement, and could leave you with having to make sacrifices to your quality of life.
How Do You Avoid Bad Pension Advice?
The best way to avoid bad pension advice is to seek advice from several different sources. Make sure that you work with financial advisors that are FCA approved. Never leap into the first product you see advertised, and always make sure that you know all the risks and the details that are written into the small print. If you feel like a product isn’t clear to you, ask for more explanation.
A good pensions advisor will take plenty of time to learn about your unique circumstances. They’ll consider your financial goals, and give advice about several different products. Don’t rush, as a pension transfer is a complex decision.
According to official statistics from the Financial Conduct Authority and the Pensions Regulator, 180 people reported scams and bad advice to Action Fraud in 2018. And in the period 2015-16, 8.4 million consumers were offered unsolicited pension advice or reviews.
Meanwhile, it is estimated that there are eight scam calls made every second related to pensions. These statistics show the scale of the issue – with trillions of pounds potentially at risk if consumers follow bad pension advice.
What if It’s Too Late?
If you’ve already been the victim of bad pension advice, you deserve to get your money back. Saving for retirement isn’t easy, and losing your money can leave you with a future you hadn’t planned for.
You can claim compensation if it’s decided that you were mis-sold a pension product. You’ll claim this through the Financial Services Compensation Scheme (FSCS). Depending on your situation, available compensation can be up to £85,000 in value. Compensation could right some wrongs and help to bring your pension fund back to its original level.
How to Make a Compensation Claim for Bad Pension Advice
If you’ve been given bad pension advice, you can choose to seek help with your claim or to go it alone. Making a claim on your own is no doubt cheaper, though you may be less likely to be successful without the legal expertise. If you’re going to claim on your own, you should be confident that you can explain how you’ve been given bad pension advice. You should make sure that you can explain exactly what you’ve lost and how.
If you’d like to use some professional help, you can find a solicitor or a financial advisor. Seek an independent financial advisor that’s reputable, and FCA approved. Using a financial advisor or solicitor will usually improve your chance of a successful claim.
How Long Does a Mis-Sold Pension Claim Take?
When it comes to claiming compensation for bad pension advice, there is no standard timeframe. Industry experts suggest the average claim will be resolved between 16 and 14 weeks, but this may be significantly longer or significantly less.
This is why many people seek the assistance of claims management companies to ensure that their case is presented in the strongest possible manner. These companies also have experience when it comes to avoiding delaying tactics and maximising your compensation.
Remember, while you may be entitled to compensation for the financial consequences of bad pension advice, you may also be entitled to non-financial related compensation for pain and suffering.
How Long You’ve Got to Make Your Claim
As soon as you become aware that you’ve received bad pension advice, you should set the wheels in motion to make a claim for compensation. Officially, you have three years to claim from the date that you recognised the problem.
In total, you’ll have a maximum of six years to make your compensation claim. After this, you can’t claim for lost money, although you should still report the incorrect advice.
Not reporting bad pension advice means that it could be given again. No doubt you’re not the only one to lose out financially because of the bad advice you’re given. By reporting bad advice to the Financial Conduct Authority, you can help to reduce the number of bad pensions advisors that are working.
Does Everyone Get £85,000?
£85,000 is the maximum compensation for any FSCS claim. You may not receive the full amount of money but could get a smaller amount. The amount of compensation you receive will depend on how much you’re thought to have lost as a result of bad pension advice. That’s why it can help to work with the experts that can place a proper value on your loss.
Compensation may be paid for financial and non-financial loss. Financial loss is the money you lost as a result of bad pension advice, whilst non-financial losses can be covered to address the emotional impact. You may receive compensation for non-financial loss if you can show that the issue distressed you.
Is Mis-Sold Pension Compensation Taxable?
No. Under normal circumstances, any compensation you receive as a consequence of bad pension advice would be tax-free. There may be some fairly unique scenarios where a taxable event may be triggered, but these are few and far between.
How Can You Be Sure You Received Bad Pension Advice?
Sometimes pension funds decrease in value, and there’s nobody to blame for the loss. Pension funds come with risks, and investments can go up or down. Losing money doesn’t necessarily mean that you were given bad pension advice.
Telltale signs of bad pension advice include an advisor not checking that you fully understood what was on offer, an advisor not providing a range of options or a sense that you were pushed in the direction of one specific product. If advice didn’t feel impartial, or you weren’t told of the risks, you likely received bad advice.