The number of defined benefit transfer complaints received by the Financial Ombudsman Service has risen 44 percent in 2018/19, compared to the previous year.
According to a freedom of information act, the FOS received a staggering 798 complaints relating to pension transfers during 2018/19. 39 percent of these were upheld.
This is compared to the 553 complaints in 2017/18, with 30 percent being upheld.
The news comes after data from the Financial Conduct Authority showed 69 percent of these transfer clients have been advised to transfer out of their defined benefit pension since the introduction of pension freedoms in 2015.
This seems to be a growing trend. Earlier this year we reported that defined benefit pension mis-selling had hit £40m in compensation. In January 2019, it was reported that the Financial Services Compensation Scheme pay-outs relating to poor DB transfer advice had doubled in two years.
The data, which was obtained by Nick Smith MP – a known thorn in the side of negligent financial firms – showed that compensation for this particular transfer had grown to £40m in 2018, up from £20m in 2016. Now, we have seen an increase of 44% on that £40m figure from 2018.
At the time, Nick Smith condemned the figures as “shocking”, stating:
Many people – including my constituents – have ended up losing thousands of pounds of hard-earned money because of poor advice they were given.
The FCA also stated:
It is unacceptable that pension transfer advice should persistently remain at such a low level in comparison to investment advice.
We expect firms to take prompt action on our findings and to check that their business and advice processes do not exhibit similar feelings.
The number of defined benefit transfers has soared since 2015 when the Government produced reforms around pension freedom. These reforms granted savers in defined contribution pensions the right to access their funds, in any way, from the age of 55.
However, savers wishing to convert their pensions were required to seek professional advice if their pension pot was valued at more than £30,000.
The FCA's survey of 3,015 financial firms between April 2015 and September 2018 concluded that too much of the advice on DB transfers it has seen was "still not of an acceptable standard".
The FCA is concerned that firms are recommending that large numbers of consumers transfer out of their DB pension schemes, despite its stance that transfers are likely to be unsuitable for most clients.
How can Smooth Law Commercial help?
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice, including transfers from defined benefit pensions. We are seeing an increase in claims for mis-sold pensions, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.
You can contact our experienced team by calling ruler number or by emailing sb@smooth-commercial-law.co.uk.