Consumer Focus has reported that people trying to start a personal pension plan are at risk of receiving bad, costly advice. The revelation comes after an investigation conducted by Consumer Focus into the way in which such pensions are sold.
It was discovered that many people have been advised to change their current pension into ones that charge high commission. The discovery has led to Consumer Focus calling upon the Financial Services Authority to get involved. The FSA carried out a survey on 1001 people in order to gain insight into these personal pension policies and to help them decide how best to put a stop to this mis-selling.
New industry regulations have led to the banning of the payment of commission to financial advisors starting from 2013. This has been done in order to avoid financial advisors giving biased advice, however it appears that these commissions have increased ahead of the new law’s implementation.
The financial ombudsman service received 2706 complaints about pensions last year. Out of the 25% that were related to independent financial advisors, most were regarding advice to switch policies. Tony Boorman, principal ombudsman at the FOS has stated, “Complaints about personal pensions are some of the most entrenched and complex that the Financial Ombudsman is asked to resolve.” He continued, “the financial amounts involved are often significant and the cases are commonly hard-fought by both sides.”
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MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.