Advisers await call to redress pension losses
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Your support makes all the difference.HUNDREDS of thousands of people who have transferred from occupational pension schemes to personal pensions may be eligible for reinstatement - and those who advised them may have to pay.
A report is due to be issued next month by the Securities and Investments Board, the insurance industry's watchdog, detailing exactly how such cases are to be dealt with.
It is believed that the working party drawing up the compensation guidelines will adopt a tough approach towards insurance companies and independent advisers that recommended transferring to personal pensions.
Key to any assessment will be whether records were kept of the advice given at the time. If they were not, the presumption will be that poor advice was given.
The SIB's initial survey last year showed that in a large proportion of the 500,000 transfers that have taken place, records were not properly kept.
Companies will visit people to try to 'reconstruct' their records. But the onus of proving that poor advice was not given will be on the companies. If they cannot demonstrate that good advice was given, their clients will either have to be reinstated into their occupational scheme, or have their pensions increased by amounts equal to the benefits lost.
Any assessment will be based on how much people have lost since they transferred out of their schemes. If returns in personal pensions have dropped like a stone since then, companies must pay up.
Gareth Marr, an independent financial adviser on the working party that is drawing up the compensation guidelines, said: 'There will have to be quite strict rules. It would not be in order for companies to treat the document as if it was something that was open to interpretation.' Thousands of claims are already piling up at the doors of insurance companies. While some companies are delaying a decision on payments, arguing that they must wait until the SIB guidelines are published, others have given in to pressure.
(Photograph omitted)
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