Some financial advisers and firms are still giving poor pension-switching advice to consumers, the Financial Services Authority (FSA) has found.
Following its investigation, the FSA says consumers may be eligible for more than £150m worth of redress for the poor advice that has been provided by some advisers. And it also stresses that ‘there remain a number of firms still giving high levels of unsuitable advice’.
Pension switching involves moving an individual’s pension fund from one place to another, usually in pursuit of a higher payout. Companies wishing to reduce their exposure to stock-market risk may also encourage employees with company pensions to transfer their savings into private pension funds.
Pension advice, pension switching
The FSA’s ‘thematic review’ of pension switching, begun in 2008, led it to contact 4,500 firms setting out the standards of advice expected from them. In addition, the review prompted the publication of a ‘pension switching suitability assessment template’; a document designed to assist firms in giving consumers good quality advice.
The FSA says it has referred six firms to its enforcement division as a result of the investigation, while others will have to carry out the ‘past business reviews’ which could result in compensation payouts for consumers who have received poor advice.
Dan Waters, the FSA’s director of conduct risk, said: ‘The actions we have taken to raise standards have driven significant change in the market and will see large sums of money returned to customers who received poor advice.
‘However, although many firms have changed the way they operate, we remain concerned that some continue to give poor advice. Ignorance is no defence and we will continue to focus on the high-risk firms through intensive supervision. We will not hesitate to take action against any firms that fall below our standards.’
For help with organising your financial future, check out the free Which? Planning your retirement advice guide.
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