His adviser explained that as he was still only 53 this would not be possible. The man persisted but his adviser remained firm.
Strangely, the next day the man received two unsolicited phone calls from pension unlocking firms.
It does not take much imagination to work out how the firms got his details; the filthy lucre on offer tempted the financial adviser to divulge his client’s details. In doing so it is highly probably he breached the Data Protection Act.
This says very clearly that those who collect and hold data must not use it in ways that have unjustified adverse effects on the individuals concerned.
Advisers violating clients’ trust by selling details to a third party which could lead to ‘serious tax consequences’ is worthy of investigationIt also lays clear rules about when data can be revealed to third parties – and picking up a tasty backhander from a pension unlocking firm is not one of them.
Last week HM Revenue & Customs warned of pension unlocking schemes “potentially landing clients with serious problems down the line because pension ‘liberation’ payments are not intended by tax law and so could have serious tax consequences for both individuals and companies involved”.
Financial advisers are, of course, not the only ones to play fast and loose with their clients’ data. Insurance companies have made a practice of passing on customer details after a car accident.
They will no doubt point to the catch-all waivers many of us fail to scrutinise properly or to boxes ticked or unticked.
But can they really claim that they are acting in their customers’ interests by passing on data to accident management companies, claims managers and car hire firms?
It is certainly in their interests but all it does for the poor consumer is contribute to spiralling premiums.
The number of prosecutions made by the Information Commissioner last year can be counted on two hands – and they concern serious breaches.
But I would consider advisers violating their clients’ trust by selling their details to a third party which could lead to ‘serious tax consequences’ to be worthy of investigation.
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Life policy woe
There are times when my frustration with individuals in this industry reaches boiling point.
Which adviser, in their right mind, would have put a pensioner into an investment offering up to 11 per cent income in 2005? Surely 11 per cent income should have set alarm bells ringing?
But that is what happened to a pensioner I have been helping recently. Her financial adviser put her £50,000 savings into Isle of Man-based Utopia TLP fund, at that time being run by AIG Alico. The fund invested in traded life policies of Americans in their mid to late 70s.
During my tenure as Money Mail editor we did not cover these investments because I felt that even writing a warning piece might lead some readers to investigate more.
We regarded them as extremely high risk and suitable only for those with large sums to gamble who were taking personal independent advice. Essentially investors were betting on how quickly Americans would die.
By 2005 there was evidence, reported in the professional press, of fraud by policyholders who pretended to be more sick than they really were in order to cash in on their policies.
Well, the inevitable happened. The fund was suspended in the autumn of 2008.
When I was contacted the pensioner, now in her mid 70s, had no idea where her money was and had not heard from her financial adviser in years. I had to tell her the fund was now in the hands of administrators and assets were about 35p in the £1.
A director of the fund told me they have been sending updates to financial advisers who mainly sold the fund as part of portfolio bonds – and these should have been passed on.
Her best hope now is to pursue a mis-selling case against the adviser who, I suspect, was either greedy or clueless.
You might ask, as I did, about the appropriateness of the investment for a pensioner of restricted means and whether there was any balance in the portfolio to counteract the risk being taken?
I am sure the Financial Ombudsman will pose the same questions.
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Silent managers
Earlier this month the Association of British Insurers announced that charges taken from workplace pensions will be disclosed to investors in real money – that is, pounds and pennies rather than in percentage terms.
The changes will be phased in between summer 2014 and the end of 2015.
I have waited with bated breath for a similar announcement from the unit trust industry. Instead we have silence. Unit trust managers, for some reason, find it too difficult to tell their investors how much money they are taking in terms they would understand.
If they really cannot carry out these calculations it leaves me wondering how they organise their accounts and calculate their profits.
Indeed, as an investor, I wonder how such a disorganised industry can make any money at all.
Tony Hazell writes for the Daily Mail’s Money Mail. Email:tony.hazell@ymail.com
