Following the backdrop of mis-selling scandals that have rocked the banking and financial industries over recent years (namely that of the mis-selling of Payment Protection Insurance (PPI) and Packaged Bank Account facilities) what is going largely unrecognised are the various other large scale mis-selling complaints that are not being addressed by the financial firms, or are taking a backseat.
This is because they are not as easily understood, or therefore promotable, by the various sources of media who would normally take hold of cases of mis-sale.
Unfortunately, because the media cannot explain and/or the target audience do not fit their readership, many people who have had specifically pension arrangements over recent years, and indeed going back into the 1980’s and 1990’s could potentially be sitting on a long-term problem.
This could be due to the fact that the money that they have invested into their pension is either dramatically reduced, or lost in its entirety (depending upon the type of policy and long-term arrangement for their pension fund that they have in place).
Pensions have been in the news recently for two main reasons: –
1. The first is in relation to the financial regulators loosening the personal requirements for maintaining pension pots and not being able to obtain cash benefits at an earlier age. However, in order to boost the economy, the regulator has reduced the requirement to keep cash in the pot and given the individual the opportunity to, not only take out some money, but also invest in different products. This, of course, cause problems.
2. The other problem is of the large firms that operate pension funds on behalf of their staff (with owners being responsible for the management of their monies which they have invested in) including the firm over a number of years, whereby those monies could be lost in a melee when the firm collapses and they find that the pension pot has, in effect, been robbed.
What is a mis-sold pension?
A mis-sold pension can take two guises: –
1. The first is in relation to the product sale, at the outset.
In recent years’ pensions have become a relevant point of conversation. People are taking the opportunity to cash in a chunk of their pension and then operate the pension themselves through another pension policy or “annuity” as it is called.
The big problem with the opportunity of having their finances to self-manage means that they are being exploited by individuals who are selling products on behalf of the firms, which are not necessarily meeting the client’s best interests.
In terms of the difficulties that are being caused, we look at annuities where clients are taking a policy that they are investing their pension savings into. At the outset, the insurance salesperson or promoter of the product should ascertain the risk and health of the individual investing in a pension annuity. Pension annuities are structured around these key areas. If, for instance, the health is not established and the client is in poor health, the annuity (if it is not structured correctly) can lead to all of the pension lump sum and contributions being lost in the event of death.
Of course, the salesperson or representative of the firm promoting the product will have been long gone by the time this happens, or will have moved on. The only people therefore looking to pick up the pieces would be the family and nearest and dearest to the person whose pension has been affected.
2. The next problem in relation to a mis-sale happens almost immediately after the mis-sale has taken place, where there is an alteration in the policy that leads to the client being disadvantaged, which is contrary to how they believed the policy had been set up in the first place and/or the terms that they agreed to.
This is relevant in relation to the funds that they took which have, in effect, lost money or been in some way, shape or form moved without authorisation leading to the client losing the pension pot that they believed they had contributed towards.
We deal with a wide range of pension concerns that clients have. As such, we are able to look at addressing any issues that they have and obtain recourse where failings have been observed.
What is a pension annuity?
A pension annuity is basically a product which is taken out by, for want of a better word, the ownerof the pension pot. An annuity is a product that enables the client to then draw monies on a regular basis, or a lump sum, out of their pension pot in, apparently, the most tax-advantageous way.
The big problem with pension annuities is that they are like a normal investment but without the benefit of protecting the actual investment itself in the event of something happening which would lead to the client’s sad demise. As such, the pension pot itself, is not carried on to the surviving relatives (if it is not structured in the correct way).
Whilst on the whole annuities can be good, if they are not sold correctly and it is not established whether the client is in satisfactory health, it can lead to a time-bomb waiting to happen against the family of the pension owner. The firm has to ascertain the levels of risk that the client has so far as health is concerned and establishing that health to ascertain which annuity best suits them. If, for instance, the client was in poor health and the likelihood is that they will not live beyond, say 5 years, then certain annuities will not be applicable, because if they do die within that period of time, they could well lose all of the benefits associated with the pension itself.
Pension annuities could very well be the financial ticking time-bomb of the future, as people will be relying upon them, and the money that they generate, both as incomes and also as lump sums in the event of death for their family to live on and as a result of them having saved for all of their lives.
Unfortunately, if the policy was not sold correctly, or was mis-sold due to the agent wanting to earn more commission, then the insured and their family could well lose everything.
Is my pension safe?
It is certainly worth checking whether your pension is safe, or not, whether there is one in place or one has been in place for a number of years. The problem with pensions, like any long-term investments, is that you only ever really find out if they are good, bad or indifferent when the worst happens. At this point, the people involved are hardly likely in the best psychological state to deal with the problems, particularly the catastrophic problems that can be caused by the mis-selling of large investments, which they would otherwise be relying upon at their greatest hour of need.
As such, it is always essential to make sure (if you do believe that your pension needs to be checked to make sure it is correct) that you do so as soon as possible, either through an independent financial assessor, or the pensions regulator.
We can of course address any difficulties or issues caused by a pension and we can of course also deal with the problems that arise when it is, sadly, too late concerning the pension itself not doing what the family believed it would achieve in the event of death, which in effect ends the policy.
We can look at obtaining redress and working on behalf of the family in order to achieve this.
How do I know my pension is ok?
How do you know if your pension is actually o.k? The big problem is that you do not.
The vast majority of people will be completely none the wiser in relation to whether their pension policy or plan has been sold correctly, whether it is the appropriate product, does not leave them exposed in any way, shape or form in the future.
Pensions can be extremely complicated and can also be abused by those who sell and promote it because ultimately individuals look to exploit people in order to generate more money for themselves.
We only need to see the recent financial scandals to understand that the vast majority of people who operate in the financial services sector do so with a business model that requires the individual to pay money at a cost to themselves.
As such, these firms can be challenged, and indeed need to be challenged, in order to protect clients, but with a business model that is based upon maximising income, it is very difficult to keep the miscreants at bay.
We represent a large number of clients in relation to a variety of mis-sales and are happy to do so, all on a “No Win No Fee” basis, in order to protect the client concerned and address any financial losses that have been incurred.