The power to settle financial complaints.
The power to settle financial complaints.
In 1994 the industry regulator ordered a review of sales of personal pension policies (both regular-premium policies and transfer policies) taken out between 29 April 1988 and 30 June 1994. This is generally known as the Pensions Review.
Pension providers were required to identify pension transfers where the risk of loss was high – and to send "Pensions Review invitation letters" to regular-premium policyholders.
It is now too late for a consumer to ask for a Pensions Review, as the deadline to be included in the formal Pensions Review was 31 March 2000. But a consumer who was not included in the Pensions Review is still able to bring a complaint to us – and we might be able to consider it.
The Pensions Review recognised three categories of problem areas:
We see complaints where the consumer says they should have been advised to join an employer’s pension scheme – but the adviser says:
In assessing these cases, we consider whether the adviser knew (or should reasonably have made further enquiries) about any occupational scheme available to the consumer – even if the consumer indicated that no such scheme was available, or that they were not eligible to join it.
We look at each case on its own merits. In general, we consider that advisers should have been aware of the existence of larger occupational schemes – and we would usually expect an adviser to have recommended a consumer to join an occupational scheme where one was available.
In some cases, the adviser claims that it was documented that the consumer "may not stay long with this employer". In these circumstances we would generally still consider it appropriate to have recommended joining the occupational scheme – to avoid missing out on the valuable benefits it offered. These would have included the death benefits provided by the scheme.
It is also the case that many employees do not end up leaving their employer despite their original plan to do so.
We assess loss as being the difference between the benefits under the occupational scheme and those available in the personal pension – making allowance for differences in the levels of contributions paid.
Although the preferred redress method under the Pensions Review was to reinstate a consumer into their occupational scheme if possible, there are only limited schemes which now offer reinstatement. Where it is no longer possible to reinstate the consumer, we generally say that the personal pension arrangement should be augmented.
Following recent changes in legislation, many personal pension providers will no longer accept augmentation redress payments. In these circumstances, we accept redress payments in the form of a lump sum to the consumer, after deducting basic-rate tax.
When a consumer complains about the advice they received to transfer benefits from an occupational pension scheme to a personal pension arrangement, we consider the case on its own merits. We investigate a number of factors including:
For the few cases that were included in the Pensions Review but have yet to be redressed – when we uphold a complaint, financial loss calculations are based on assumptions set by the Financial Services Authority (FSA), as industry regulator, on 1 April 2003.
For complaints that fall outside the boundaries of the Pensions Review – when we uphold a complaint, financial loss calculations are based on the latest set of assumptions for redress in pension mis-sale cases that fall outside the Pensions Review.
We receive complaints from consumers who say that they did not receive the Pensions Review mailings – and now realise they may have been badly advised in the past.
In these cases we may have to consider whether the complaint is "time barred". We are allowed to investigate cases only where our rules allow it. The rules we operate under are set out as part of the Financial Services Authority's Handbook – in the section called Dispute resolution: complaints.
In particular, FSA’s rule DISP 2.8.2R(2) says that we cannot consider a complaint referred to us more than:
In most cases, "Pensions Review invitation letters" were sent to consumers a significant time ago. Where a financial business raises an objection to our considering a case – and it can show that the "Pensions Review invitation letters" were sent to the consumer’s correct address at the time of the mailing – we normally decide that the case is "time barred" under our rules, and so is not one we can consider.
But where we identify that the "Pensions Review invitation letters" were sent to an incorrect address, we are normally able to investigate the merits of the complaint.
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.