Between 29 April 1988 and 30 June 1994 many members of the
public were advised to take out personal pension plans when
they were already members of, or had access to, an occupational defined benefit pension
scheme. Also, many employees who had preserved
pensions with the scheme of a former employer were advised to
effect a transfer into a personal pension scheme.
The regulator responsible for overseeing the sale of personal
pension plans realised that those advised to take out a personal
pension plan in these situations may have lost out financially.
They therefore ruled that firms must review the sale of personal
pension plans during that period. Those policyholders that were
found to have been mis-sold, had to be compensated for any
financial loss suffered.
Using guidelines laid down by the regulator, the firm, which
provided the advice, obtains details of the benefits that would
have been accrued in the occupational pension scheme and compares
them to the potential benefits payable from the personal pension
plan, on the assumption that the member paid the same level of
contributions as they would have to the occupational scheme. If it
shows that the policyholder has lost out by joining the personal
pension plan, the firm must make good the financial loss.
This may mean reinstating the policyholder into the occupational pension
scheme. If the trustees of the scheme refuse to accept
reinstatement, the policyholder must be credited with a one-off
contribution into the personal pension plan. Alternatively, a few
insurance companies gave a guarantee to review matters when the
policy holder reached retirement and, at that time, make good any
financial loss that has been suffered.
The review itself began at the end of 1994 and still on-going
and it is hoped that this will be completed by 2005/2006. However,
firms are only carrying out reviews on those policyholders who
requested a review on or before 31 March 2000. If you believe you
have been mis-sold a pension and would like your case reviewed, but
you have missed this deadline, you should contact the firm who gave
you the advice and ask for a review. They may be able to review
your case under 'special pensions review procedures'.
Some firms have gone out of business since the review began,
therefore preventing some policyholders from having their cases
reviewed. The current regulator, the Financial Services Authority
(FSA) has set up their own team to deal with these cases. If
you have not had your case reviewed because your firm has gone out
of business, you should contact the FSA Pensions Unit on 020 7712
8990 for advice on how to proceed. If a claim for financial loss
has to be made, there is a body, the Financial Services
Compensation Scheme (FSCS), which can make awards. However,
such awards have a maximum amount that can be paid, currently
£48,000.
Q & A's
No - only personal pensions sold between 29 April 1988 and 30
June 1994.
It only covers the following:
- transfers - where you took a transfer from an occupational
pension scheme to a private pension scheme, and
- opt out or non joiners - where you took out a personal pension
instead of staying in or joining an occupational pension scheme
which you were eligible to join.
If you believe you may have been incorrectly advised to leave
your company pension scheme to start a personal pension scheme, you
should initially complain in writing to the Compliance Officer of
the company who gave you this advice. This may not be the same as
the company which operates your personal pension plan. The same
applies if you were advised to transfer your deferred pension from
a previous employer's pension scheme into a personal pension
scheme.
Most insurance companies have set up special departments whose
sole function is to ensure that a mis-selling review is carried out
in strict accordance with the guidance issued by their regulator.
You will be advised of the outcome of the review and how the
company proposes to compensate you if their advice is found not to
be sound.
Any action to rectify the situation will usually be in the form
of either payment of compensation directly into your pension
scheme, or full reinstatement of your pension rights under your old
company pension scheme.
If you are not satisfied with the response you receive from the
Compliance Officer, you should then take your complaint to the
Financial Ombudsman Service (FOS). The address of the FOS is as
follows:
Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR
Tel: 08000 234 567
If you want to claim against a failed investment firm, for
example an Independent Financial Adviser (IFA), you should write to
the Financial Services Compensation Scheme (FSCS). The FSCS can
only help you if the firm cannot return the money or investments it
owes you, or cannot pay for the losses it may have caused.
Their address is as follows:
Financial Services Compensation Scheme
7th floor Lloyds Chambers
Portsoken Street
London
E1 8BN
Telephone 020 7892 7300
Employers are not obliged to operate an occupational pension
scheme and can cease sponsorship of such arrangements. If they do
not have pension provision in place they must provide 'access' to a
Stakeholder pension scheme unless they are exempt. This would not
be classed as mis-selling. However, if you could have stayed in
your occupational scheme but have instead been advised to join the
group personal pension scheme, this could constitute mis-selling
depending on the circumstances.
The main role of TPAS is to help individuals who have specific
problems about their rights under occupational, personal pension or
stakeholder pension schemes. We also provide general factual advice
and information about all aspects of pensions through our
helpline.
TPAS is not able to advise you whether the offer you have been
made is a satisfactory one. We are not authorised to give specific
individual investment advice by the Financial Service Authority
(FSA). We can however give you some information about the process
of compensation.
You should initially consider whether you need to ask the
company who sold you the pension for more time to consider the
offer they have made to you.
You should check with the company whether they have explored the
possibility of reinstating you into your original company pension
scheme. This is usually the preferred option, as it puts you back
in the position you would have been in, had the wrong advice not
been given. This is often not possible, however, as there is no
legal obligation on your former scheme to allow you back in. If
reinstatement is not possible, any compensation offer will almost
certainly have been made in accordance with the industry
guidelines. You can obtain a copy of the guidelines used for
calculating the redress amount and you may wish to ask the
insurance company for the relevant sections of the guidelines.
Alternatively you can get these from the FSA Publications Order
Line on 0845 608 2372 but they will make a small charge for
this.
We suggest that you ask the company for confirmation of all the
data that has been used in carrying out your review and that you
check whether the data is in fact correct. The information you need
to ask for is a 'simplified comparison'.
If you are not satisfied with the redress amount, you have the
right to appeal to the Financial Ombudsman Service (FOS) whose
address is as follows:
Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR
It is likely that all the FOS will do is to check that the offer
has been made in accordance with their guidelines. They will not
check the actual calculations.
You could also consider taking advice on this matter from an
authorised Independent Financial Adviser (IFA) but you would have
to pay for their services. You should check that the IFA has
previous experience of checking mis-selling compensation offers.
You should also ensure that you ascertain how much they charge for
their services before you commit to them. IFA
Promotions will be able to provide you with the names and
addresses of IFAs in any particular area.
Yes, but as mentioned before, you do have the right to appeal to
the Financial Ombudsman Service if you believe that this has not
been done properly.
People who wanted their case checked had to ask for a review no
later than 31 March 2000.
In this situation then firms are not required to check your case
using the 'special pensions review procedures'. The firm may decide
to use the 'special pensions review procedures' but do not have to.
This is up to each firm to decide.
Firms must follow set procedures when investigating your
complaint. Generally they will:
- acknowledge your complaint in writing within 5 business
days;
- attempt to complete the investigation within 2 months; and
- on completion of the investigation write to inform you of the
outcome.
If the investigation is not completed within 2 months, the firm
must write to you to explain the delay and say:
- that they are continuing to investigate the complaint; and
- that if you are not satisfied with the progress of the
investigation, you may refer the complaint to the ombudsman.
It is understood that the Financial Ombudsman Service will not
be able to accept fresh claims from people who have already
accepted pay out.
