The UK is in the midst of a mis-sold pension scandal that could be one of the biggest financial scandals the country has ever seen. Over the last two years, the number of people claiming compensation for a mis-sold pension in the United Kingdom has more than doubled.
The sums of money involved are huge and the sheer number of people who have been mis-sold pensions, and quite frankly ripped off by greedy and unscrupulous financial advisors, is shocking.
In this guide article we are going to go over absolutely everything you need to know regarding mis-sold pensions, exactly how it all happened, whether you are eligible to make a claim or not and exactly what you have to do to make sure you claim back the compensation that is rightfully yours.
We have also designed an infographic below which gives an easy to follow visual representation of the whole mis-sold pensions fiasco, and whether you are eligible to make a claim for compensation. If you would like to check that out right now, click here.
*IMPORTANT*: If you believe you may have been mis-sold a pension, have been mis-sold a pension transfer, mis-sold a SIPP or have been given any sort of wrong advice on how to manage your pension, then give us a call now on 0131 564 1940 to find out exactly how you can claim back up to £150,000 in compensation.
If you can't call right now then fill out the quick form below, then click the "Get my advisor!" button. One of our pension mis-selling experts will get back to you as soon as possible:
How big is the UK pension mis-selling scandal?
Unfortunately, the figure of mis-sold pensions that have been poorly invested, advised and/or managed by shady financial advisors is estimated to be around the £10 billion mark. Yes you read that right: 10! BILLION! POUNDS!
As you can imagine, that is a hell of a lot of people who have been swindled out of their retirement nest egg and at Edinburgh IFA we will not rest until every victim who is due compensation gets it.
We have gone to a lot of trouble, time and effort to put together this guide and our easy to follow infographic for the victims of this scandal. It would really make a huge difference if you could take a few seconds to click the share buttons below and share this post on your social media to give us the best chance of getting it in front of potential victims so they know that they are not alone and there is a chance they can get their money back. We'd really appreciate it guys, and it'd be your good deed for the day. Thanks a lot!
Please click one, or all, of the share buttons below and make sure that your friends and family hear about this. There is a good chance that someone you love could be a victim and due up to £150,000 in compensation! Thank you so much for helping us spread the word...
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We have also put together this short YouTube video which breaks down the infographic in to slides:
Introduction to mis sold pension compensation
The good news is that in recent years tens of millions of mis-sold pensions have been compensated to victims but this is really only just scratching the surface.
Let's get in to exactly what pension mis-selling is, who perpetrated it, who is eligible for compensation and exactly how you get it.
How do you know if you are eligible for mis-sold pension compensation?
If your financial advisor, bank, or any other financial firm sold you a product that wasn't appropriate for you, you could get compensation for bad pension advice if you make a complaint and the complaint is subsequently upheld.
Mis-selling can cover quite a few bases, including;
- Being given inappropriate advice about a particular product, the risks not being properly explained to you, or not being given the information you required and ended up with a product that wasn't right for you.
- Charging ongoing fees and not receiving at least an annual review or follow up service from your pension adviser.
- Your adviser did not carry out a full and comprehensive fact find then there is a good chance the pension advice given was mis-sold as they do not know your full circumstances, thus cannot provide the suitable advice if they do not know the whole picture.
- If you were advised that you should transfer out of your defined benefit pension or final salary pension in to a defined contributions pension there is a chance that you could be due compensation. Even if your new defined contributions pension fund has not technically performed poorly. There are instances where this may have been a good move, but it is very hard to justify in most cases.
- If you were recommended to transfer your pension from a regulated investment in to an unregulated investment.
- Being charged an excessive or unjustified amount by the adviser that could not be recouped.
- Going from a cheaper to a more expensive pension without justification.
- The risks of the pension fund not being fully explained.
- Being recommended a pension fund that does not suit your risk profile.
This is the more technical side of this whole scandal, and why you should really have a chat with one of our specialists who can explain everything in more detail and get to the bottom of whether you have a chance at compensation or not.
Financial advisors are facing a stream of grievances about mis-sold pensions. It has been found that thousands of people in the UK have been poorly counselled on their pensions by financial institutions and independent financial advisors (IFAs), and they are now taking steps to claim their money back.
Deceived pensioners and investors could pocket up to £150,000 in compensation due to their floundering pension schemes as part of the colossal Self Invested Personal Pension (SIPP) scandal engulfing the United Kingdom – which the market professionals fear will overtake the recent massive wave of PPI (Payment Protection Insurance) claims.
What are mis-sold pensions?
With life expectancy continuing to rise, having some form of a pension plan is critical. It will help people enjoy a long retirement without the worry of looking for ways to cover the costs. This usually means paying into retirement pension plans with the money invested in shares and stocks.
Regrettably, thousands of Brits have been convinced to put their money into inappropriate investment schemes through mis-sold SIPPs. These are the investments, which the investors were promised would ensure they can enjoy a comfortable retirement, as they would deliver higher returns.
The truth is that people were deceived into investing in worthless products that won't reap any benefits. There are many ways an individual might have been mis-sold a pension. Here are some of the most common:
- Nobody asked if the individual had any other insurance which could cover the loan.
- The individual wasn't informed how the commission would work on the SIPP.
- The individual wasn't told the rules about pre-existing medical conditions.
- Nobody thoroughly explained the terms and conditions (small print) to the individual.
- The individual was informed that SIPP was obligatory and that he/she had to take it out.
- The individual was retired or employed when he/she were sold the SIPP.
- The individual wasn't informed that he/she could buy SIPP from another company.
- The individual wasn't informed about exclusions to the policy.
- The individual was pressured into buying the SIPP.
- The individual was told to transfer his/her pension into SSAS or SIPP investing in Property Syndicates, Carbon Credits, and other risky sectors.
- The individual wasn't provided with all the options available to obtain the best possible deal.
- The individual's attitude towards risk or capacity for risk was not properly considered.
- The individual may have been offered a free Pension Review and advised to transfer his/her investment.
During research conducted by the Financial Conduct Authority (FCA), it was found that one in eight individuals who received financial advice in the last year had an adviser mis-sell them a pension product at some point.
Remember, you do not have to have lost money from your pension pot in order to have been mis sold your pension, or to claim back compensation. Here is an example that could help you understand the concept of pension mis-selling in a simpler way.
The situation is similar when you are sold a pension product. The financial adviser endorses something appropriate for your requirements and clarifies what the product can do and can't.
The financial adviser should ensure that you know the risks associated with buying the pension product. If the financial adviser does not do this, you can claim for compensation.
What are the UK's most common mis-sold pensions?
The Financial Conduct Authority regulates the sale of mainstream investments, funds, shares, and stocks that you may generally choose to invest via SIPP. But, there is a whole host of unregulated investments that the investors have been influenced into making with their pension funds.
The majority of these investment schemes are known as Unregulated Collective Investment Schemes (UCIS). In this, a host of individual investors pool their money for a fund manager, which is then used to invest in some form of asset that is not regulated by the Financial Conduct Authority.
Here are some of the commonly mis-sold pensions
#1 Self Invested Personal Pension (SIPP)
The Self Invested Personal Pensions usually are set up to hold high-risk, under-performing, illiquid investments with higher charging structures. The individuals do not have to involve their employer for a SIPP. Instead, all they have to do is enter an agreement with their pension provider and start making payments for their pension. Here are some examples of such investments;
- Parking Investment
- Cape Verde
- Global Forestry
- Ethical Forestry
- Green Oil
- Sustainable Agro Energy
- Store Pods
- The Resort Group
- Harlequin Property Investment
- Australian Farmland
- Global Cure Environmental Investment
- Elysian Fuels
- Los Pandos Development
If you have invested in any of the above unregulated investments with your pension then please click here and contact us right away so we can advise you what to do next to make sure you can get the compensation you deserve.
These investments are not suitable for the majority of individuals. They are not only high-risk investments but can be extremely illiquid and speculative. That is, selling these investments is not that easy.
In 2013, the Financial Conduct Authority banned the sale of these investments to ordinary investors. For an investor to put his/her money into such investment, he/she will require proving that he/she is a sophisticated or a high-net worth investor.
The issue is that in the years leading up to the prohibition, people can self-certify that they are high-net worth, or get an financial advisor to do it for them. Consequently, it is very easy for the SIPP mis-selling to happen. If you believe you are due SIPP compensation from mis-selling then don't waste any time in making a claim.
#2 Small Self-Administered Scheme (SSAS)
A Small Self-Administered Scheme is set up to prevent stern guidelines by unregulated entities, such as substitute service providers or sales agents. Similar to a Self Invested Personal Pension, an SSAS is set up to hold high-risk, illiquid, and underperforming investments.
As said before, Self Invested Personal Pensions are the most commonly mis-sold pension in the United Kingdom. In 2013, it was found out that most financial advisers offered instruction that did not obey with the Financial Services Regulator's requirements. Most customers were directed to set up the scheme without considering the implicit substitute schemes apprehended within the SIPP.
One can successfully claim for reimbursement if he/she provide necessary proof that his/her financial adviser provided inappropriate advice to transfer an existing pension to an SSAS.
#3 Free Standing Additional Voluntary Contribution (FSAVC)
A Free Standing Additional Voluntary Contribution, unlike other pension schemes, does not hold any limit on the amount of money one can pay into their monthly pension fund. FSAVC gives the investor the freedom to choose how much he/she wants to save for retirement.
Those looking for pension plans that provide flexibility with their spending can opt for this type of pension plan. However, there is a possibility that one can feel like his/her FSAVC pension was mis-sold.
#4 Final Salary Pension
The Final Salary Pension is handled by the employer where the final salary of an employee is taken into account at the time of his/her retirement and provides an amount that is equal to his/her last known pay. Due to its very nature of being volatile, it is not advisable to transfer out this type of pension to any other pension provider or product.
This type of pension plan is quite popular as it provides the individual with a guaranteed income that increases as his/her salary increases.
Despite the absolute benefit of a guaranteed income for life, many final salary pensions were transferred out into a investment environment therefore putting clients in a position where they could then potentially incur losses and run the risk of their pension running out before they die. You can claim for final salary pension closure compensation.
#5 Occupational Pension Scheme (OPS)
An occupational pension scheme is set up by an unregulated entity in order to prevent regulated advice procedures. It typically references an account set up by an employer of the organisation to help employees save for their retirement. In the majority of the cases, an occupational pension scheme falls under three categories:
- Defined benefit pension schemes
- Defined contribution pension schemes
- Cash balance plans
In most cases, the occupational pension schemes require the employer to contribute towards the employees' pension. The amount contributed by the employers is deducted from the employees' monthly wage. There are possibilities that an OPS is mis-sold.
#6 Qualifying Recognised Overseas Pension Scheme (QROPS)
The Qualifying Recognised Overseas Pension Scheme abides with certain Her Majesty's Revenue and Customs (HMRC) requirements. This type of pension scheme is designed for those who plan to relocate abroad after retirement.
But, many customers have been mis-sold a QROPS, with the assurance of a cash advance after the completion of the mis-sold pension transfer.
What is a Pension Transfer?
Pensions represent one of the most substantial assets an individual can own beside his/her home. Financial advisers have been courting members of the occupational schemes, and pension fund holders, to persuade them to migrate their funds to new products and providers.
The advice may not be appropriate and may not have provided the investors with what they had anticipated. This would be classified as pension mis-selling, and a claim can be made against the IFA for providing this conflicting advice.
How did pension mis selling start?
It is all about a professional presentation. You will get a phone call unexpectedly out of nowhere. The person on the other end of the call will communicate about a fantastic opportunity that you can’t miss. In the present low-interest rate environment, the supposed returns sound attractive. Moreover, the person also guarantees those returns during the initial stage. For example:
A guaranteed return of 17% for the first three years! It sounds more than attractive. Everyone would want that.
Worse still, it doesn’t stop with just a phone call. You may even be invited to attend seminars where you may get convinced that the firm deals with professionals who understand these investments. This will make you feel like you are being presented with a legitimate opportunity.
You may also receive an annual statement from your SIPP stating that everything is fine, suggesting that the investment is still pretty hot and valued.
Although the reality may be different, the annual statement may claim that your investment in Store Pods is worth say £50,000, but it is a non-standard investment.
The truth is the investment is only worth what someone will pay for it, and honestly, it may be actually nothing at all.
Unlike shares and stocks, there is not a ready market to sell such SIPP investments; hence, it can be really difficult.
They shower you with lucrative returns while underestimating the threats involved or failing to address them at all.
The harsh reality is that the sums secured in these mid-sold investments can be huge. In general, they range from £20,000 to £75,000+, but it can vary significantly.
There are cases where investors have put in hundreds of thousands of pounds. What’s worse is that many investors then tell their friends about the scheme and encourage them to invest as well.
Did You Use Any of These Pension Advice Companies?
If you used any of the following companies to seek pension or investment advice then there is a chance that you have been mis-sold and poorly advised, therefore may be due compensation;
- Knightsbridge Financial Management
- Moneywise Financial Advisors Limited
- Henderson Carter Associates Limited
- Asquith Hart Financial Management LLP
- Precise Advice Partnership LLP
- Cherish Wealth Management
- Total Wealth Solutions Limited
- CIB Life & Pensions Limited
- Bank House Investment Management Ltd
- Alderley Asset Management Limited
- Pengwern Wealth Management
- Cumulus Investment Management Limited
- Hennessy Jones
- Financial Page Limited
- Blue Infinitas
- Kingsland Financial Management
- Luapkram Limited (Ashton Hoyle)
- Douglas Baillie Limited
- SFIA Limited
- 1 Stop Financial Services
- Strachan and Windram
- Real SIPP
- Baker Wainwright
- Kynaston-Carnoustie Financial Consultancy Ltd
- Shah Wealth Management
- Build your Wealth Ltd
- Aspen Financial Planning
- My IFA Friend
- Choices Financial Services Limited
If you have dealt with any of the above companies in the past regarding your pensions then please click here and contact us right away so we can advise you what to do next to make sure you can get the compensation you deserve.
Mis-sold Pension Compensation
Your financial adviser is obliged to verify and counter verify if the investment is viable to put your pension and SIPP in it.
If you feel that you are a victim of mis-sold pension due to unsuitable counsel, you need to act fast as there are time limits to make such claims.
You can make a claim to the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman (FO).
You can apply for compensation through a claims management company or a lawyer, or even directly by filling the online claims form.
When you apply for compensation through a claims management company, they will put emphasis on whether you are a high-net worth investor and were the investment products suitable for your requirements and in-line with your risk profile.
The Financial Ombudsman, on the other hand, looks at complaints made about FCA regulated companies. If your claim is deemed valid, the Financial Ombudsman will tell the business how much reimbursement is outstanding. The award limit for losses is around £150,000 plus interest.
Lastly, the Financial Services Compensation Scheme only looks at complaints if an organisation has entered liquidation or administration and is unlikely to be able to pay the victim the compensation. This is good as it means even if a rogue company has gone out of business, victims can still make successful mis-sold pension claims.
What are the chances of success?
During the 2017/2018 calendar years, the complaints to the Financial Ombudsman about pension and SIPPs increased by over a third – around 37%. Out of 2051 complaints registered, 52% were upheld.
This compared with 1493 complaints in 2016-17, and merely 697 complaints in 2013-14.
According to Financial Ombudsman, the main driver for the recent upsurge has been complaints about discretional fund management.
Complaints about discretional fund managers often relate to funds that haven’t been invested with the agreed strategy. The Financial Ombudsman also received complaints about advice to invest in unregulated investments and other administration issues.
The success of the complaints upheld depends on how they are processed. That is, the officials consider what has happened and agree with what is rational and reasonable in all situations of the complaint.
The Financial Services Compensation Scheme, on the other hand, can pay out up to £50,000.
This has put both the SIPP providers and financial advisers under pressure to safeguard investors from inappropriate high-risk investments that can stem the flood of mis-selling.
A reputable company will never cold call the investors about their pension and try to entice them into switching to a SIPP and placing money into an unsuitable high-return investment.
The high-pressure sales tactics often fool most investors as they are convincing. However, investors must try to avoid this kind of approach.
I have been mis-sold a pension. How do I make a claim?
If you feel like you are a victim of pension mis-selling in the UK, then you should start looking at your options.
There is no need to panic; there are a few options to file a reimbursement claim against the SIPP provider or the financial adviser.
You need to act quickly because if you are going to complain to the Financial Ombudsman, there is a time limit of six years from when the product was sold to you, or three years from when you noticed that you had been mis-sold – whichever is later.
Before you reach the Financial Ombudsman for filing your complaint about your SIPP provider or IFA, you need to be prepared.
Step 1: Gather all the details you require
The Financial Ombudsman will be looking for proofs to uphold your complaint.
Therefore, you need to find the concrete evidence against your service provider and how they deceived you into buying an unsuitable investment plan. You need to explain your problem to the official.
- Stick to the facts and be clear and concise when describing them to the Financial Ombudsman
- Gather all the relevant documents, written proof, and all other information about your scheme
Step 2: Complain to your IFA or SIPP provider
- Ask for the adviser’s internal complaints process. Every firm has one; it is mandatory. It will tell you whom to contact in the events of an issue. If the provider maintains a website, you can get the copy from there.
- Once you have complained, the provider has eight weeks to respond. If the provider fails to respond, you can go to the Financial Ombudsman.
- If the provider has answered to your complaint, but you are not pleased with the kind of reply, you have six months to take your complaint to the Financial Ombudsman.
Even if the provider has gone out of business, there is still a chance to get compensation.
Step 3: Ask Financial Ombudsman to investigate your case
If you are not happy with the response the provider gave you regarding your complaint, you need to immediately contact the Financial Ombudsman within six months of receiving the response from the provider. There are time limits, and you need to act quickly.
However, you are advised to first check with the Pensions Advisory Service for pension mis-selling issues.
- Financial Ombudsman is an independent service that will investigate your service for free
- However, before you use the Financial Ombudsman service, you need to follow the provider’s official complaints procedure
You might want to wait a little longer if the provider is cooperating with you regarding your concerns that you have been mis-sold.
On the other hand, it could take some time to find the related information and files if your complaint ties to something that occurred years ago.
Essentially, the Financial Ombudsman’s judgement is where things end. However, if you are unhappy with the verdict, you can present the matter before the court.
Court cases are expensive as the lawyers are pretty stern about their fees. So think through before considering this as your final option. Court cases also come with uncertainty; thus, there is no guarantee that you will win.
If you don't have the time or don't feel confident in pursuing the claim for compensation yourself, then fill out the quick form below and we will put you in touch with one of our highly experienced independent claim handlers who can give walk you through the entire process.
How much compensation will I get?
If the Financial Ombudsman upholds your claim, you are entitled to compensation. The compensation you will get varies greatly from case to case depending on your situation and size of pension pot.
However, the average amount of compensation claimed for pension mis selling cases is around £25,000 for private pensions and £50,000 for final salary pensions. So you can see that it is well worth your while looking in to seeing if you were indeed mis-sold a pension and are due compensation.