Pension mis-selling is a growing problem, and victims have the right to claim compensation. But, according to the Financial Services Compensation Scheme (FSCS), savers missed out on a combined £104 million in compensation last year. That’s an average loss of £108,000 per claimant.
How does FSCS compensation work?
Financial advisers can earn huge fees for persuading people to move their pensions. But all too often this advice falls short, and savers end up transferring to unsuitable products. If you were advised to transfer from a pension to an unsuitable scheme and the provider or adviser has since gone out of business, you may have a claim with the FSCS.
The FSCS exists to protect consumers when financial firms fail. The FSCS has forecasted sharp increases in claims for mis-sold pensions, with the overall compensation fund expected to reach £900 million for 2022/23. If a UK-regulated adviser has given bad advice concerning a pension transfer, and the provider or advisor has since gone out of business, the FSCS may be able to pay compensation up to £85,000.
However, the current fund is not big enough to cover the sheer scale of pension mis-selling claims being made, so while people are able to get some money back, the compensation available is not currently enough to cover all the money that has been lost. Indeed, according to the FSCS, last year almost 1,000 claims were above the current £85,000 limit.
Where does the compensation fund come from?
The FSCS compensation fund for mis-sold pensions is funded by a levy on the financial services industry.
One of the most common mis-selling techniques is where people are targeted by unregulated salespeople via cold calls, often using hard-sell, pushy techniques. Victims of this type of mis-selling are then frequently passed to regulated financial advisers to facilitate the inappropriate transfer. Caroline Rainbird, chief executive at the FSCS believes that firms that use unregulated “introducers” to find clients should pay more into the levy as the practice is confusing and high risk for consumers.
What if the firm is still in business?
If you were advised to transfer from a pension to an unsuitable scheme that has not gone out of business, you may be eligible for compensation via the Financial Ombudsman Service (FOS).
A claim for mis-selling to the FOS can result in compensation up to £355,000. Caroline Rainbird believes this disparity between the maximum levels of compensation is confusing and needs to be addressed.
Making a pension mis-selling claim
Keller Lenkner UK seeks compensation and justice for victims of corrupt or negligent financial advisors and organisations. And, because we offer no-win, no-fee funding arrangements, when you appoint us you will benefit from expert legal support and complete peace of mind without having to worry about costs.
We know the best avenues to pursue to maximise the compensation paid to you should you win. Furthermore, because we know what to look for when investigating a case, we can often increase the value of a claim substantially. Our solicitors have even won cases where victims had been told that there was little to no chance of compensation.
Experts in pension mis-selling cases, when it comes to getting justice for our clients, we have everything it takes to win.