A good pension should be the bedrock of someone’s savings. It should ensure that those who save diligently are rewarded with a degree of comfort in retirement.
Pension contracts are littered with terms and conditions, but it is the unwritten contract that concerns me today. The tacit understanding is that once someone has chosen a pension company, that company will behave fairly towards their customer, giving them accurate information so they can make sensible decisions about their retirement.
My colleagues at Money Mail have, using contacts from readers and evidence from both financial and pension ombudsman records, found cases in which companies are making horrendous mistakes that are having devastating effects on people’s lives.
We have all have come across cases in which insurers send out wrong figures, then a few weeks later turn around and say: “Oops, got that one wrong. You’re actually a few thousand quid worse off than you thought. Never mind, old chap – you never had the money in the first place.”
There are errors involving overpayments, or wildly inaccurate statements leading people to retire early or leave their money in poorly performing funds, as well as blunders over widows’ benefits.
These errors can create havoc with people’s lives, leaving them thousands of pounds worse off, yet the compensation is often only a meagre £250 to £500.
Errors can create havoc with people’s lives, leaving them thousands of pounds worse off, yet the compensation is often only meagreLet us look at two cases:
Life insurance firm Alico, now owned by MetLife, told a client his pension pot was worth £763,300. He says he gave up his job believing he could afford to retire. In fact his pot was worth £433,000. Alico was made to pay him £250 for distress and inconvenience. The man was unable to get his job back.
The life insurer Phoenix Life for a decade sent a man inaccurate statements showing his pension pot to be much higher than it actually was. Phoenix blamed a computer error. The man was paid £500 compensation.
Had accurate figures been provided, he may have moved his pension or saved more.
These errors are life-changing. But the Financial Ombudsman Service seems to treat them no more seriously than a PPI claim or a basic banking dispute. Perhaps they are too well-pensioned themselves to appreciate the impact these mistakes are having.
In another case, Standard Life overpaid a man by £20,000 over a decade. Fos ordered the man – who retired early based on this pension – to repay £50 a month for the rest of his life. Standard Life had wanted more.
It might have been argued at one time that paying Peter too much would rob Paul when he retired. But so few funds are now owned by policyholders that this argument no longer holds water.
When an error of this kind occurs, the ombudsman must look much more seriously at the impact it will have on the investor’s life, and award reparation accordingly.
And the directors could take the opportunity to explain why such catastrophic errors occur so regularly.
Ask and you shall receive
It’s car insurance renewal time again in the Hazell household. And once again I’ve had to play my annual game with the insurer.
This year they quoted me £1,100 for the three cars driven by my wife, my stepson and me. This included breakdown cover for my stepson and a couple of hire cars.
So I call them to ask if this is the best they can do. Hey presto, there’s an instant 20 per cent discount on the breakdown cover and lower quotes for all three cars.
My total premium falls to £898.01 – a saving of more than £200 for a phone call lasting less than 10 minutes.
It’s great to get a lower quote, but the millions who just accept the first quote that comes are clearly missing out. I wonder how fair it is to all the other customers if only those who are prepared to move get offered the best deals.
Learn from Barclays’ errors
‘Clients’ custody assets’ is not a phrase to make Joe Public’s ears prick up. But for a bank to fail to protect its clients’ assets properly is deeply worrying – not to say extremely embarrassing.
Barclays put £16.5bn of clients’ custody assets at risk, hence it has been hit with a record FCA fine of more than £37m.
The full ruling paints Barclays Investment Bank as a shambolic outfit that failed to maintain books and records, and didn’t perform regular reconciliations of safe custody assets.
It’s worth taking the time to read, as it really is an object lesson in how not to run an investment division.
Tony Hazell writes for the Daily Mail’s Money Mail section
t.hazell@gmail.com
