It is essential to consider how best to invest for your retirement. While most people in the UK will benefit from a state pension, it is advisable to invest enough money early enough to provide for a comfortable life after work and to prepare a future for your children.
There are many pension options to choose from, and most of these are legitimate. However, in recent years, there has been an increase in mis-sold pensions, which the Sunday Times referred to earlier this year as “the dawn of a new mis-selling scandal”.
Many of these mis-sold pensions took the form of SIPPS, or self-invested personal pensions, with the victim being encouraged through a cold call to reinvest their money in a high-risk scheme that promised an equally high return. SIPPs give complete control over the investment, but there is also the possibility of the pension losing money.
Many of the unscrupulous financial companies who were running these schemes were relying on the legal concept of caveat emptor, or ‘buyer beware’; beyond ensuring that the scheme adhered to the relevant tax regulations, the onus was on the investor to ensure they understood the risks.
Some of these schemes were fraudulent in conception; the pension schemes were a front for a push payment scam, and customers lost their retirement savings. In other cases, the ‘pensions’ were a Ponzi scheme that used funds from new business to pay existing customers’ dividends; once the schemes became unsustainable, they collapsed.
Some of these schemes invested in high-risk activities such as storage pods or overseas forestry which could not deliver the promised returns.
In 2011, the Financial Services Authority (FCA) began to question who was actually responsible for these mis-sold pensions. Their conclusion was that it was not enough for those behind the schemes to rely on the customer’s judgement; they had to shoulder some responsibility for ensuring the pension scheme was suitable for the customer.
In many cases, SIPP providers were not exercising due diligence in the running of their schemes. In addition, financial advisors were guilty of hard-selling their schemes with little regard to their suitability. Many financial advisors were failing to take their clients needs into consideration by advising customers with a low risk appetite to take on high-risk investments.
Yet more cases involved unregulated market ‘introducers’ who were illegally approaching customers or colluding with financial advisors to aggressively push unsuitable schemes.
There is a high degree of complexity in deciding who is responsible in the case of a mis-sold pension, so it essential to get claims advice. If you have been the victim of a mis-sold pension, there is a time limit by which you must enter a claim.
In order to decide whether the scheme was mis-sold, ask yourself: was I informed of the risks? Was the fee structure made clear? Was the scheme successful? Did I really want this scheme? Were my circumstances and needs taken into consideration?
If you answer ‘no’ to any of these questions, you may be the victim of a mis-sold pension. Making a claim is complex and best left to those with experience, so contact a professional to get claims advice.
In some cases, money for fraudulent investments can be claimed through the banks; in other cases, the scheme provider will be responsible for compensating you directly for a mis-sold pension. If the scheme was mis-sold through a regulated financial advisor, there may be a claim through the Financial Ombudsman Scheme (FOS) or the Financial Services Compensation Scheme (FSCS).
In any case, the spotlight is on mis-sold pensions, so get claims advice now.