Financial Services Compensation Scheme  

FSCS boss pushes for higher pension advice protection limits

FSCS boss pushes for higher pension advice protection limits

The chief executive of the Financial Services Compensation Scheme has pressed his case for reforms to protect retirement savings.

Mark Neale said the Financial Conduct Authority should take action given the increasing number of claims relating to self-invested personal pensions the FSCS is dealing with.

He said that while instances of bad advice are “few and far between”, when they do occur they can be “devastating” for retirement savings.

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Mr Neale said: “We see that now with Sipp-related claims arising from advice to transfer retirement savings into a Sipp and then to invest in illiquid and risky assets.

“That’s why I believe it is right to take a fresh look at the level of FSCS protection for negligent advice – currently £50,000 - as part of the current FCA review of our funding.

“I can see a sound case for harmonising retirement savings limits. This has the support of MPs with 60 per cent supporting harmonisation according to our research.

“There is little logic to protecting retirement savings in insurance products without limit, but to restrict protection for mis-selling to £50,000.  This is confusing for consumers and corrodes confidence.”

The FCA is currently carrying out a review of how the FSCS is funded, with particular emphasis on how advisers contribute.

Mr Neale said the current rules left consumers with retirements pots of more than £50,000 “in a quandary” because breaking the pot up made no sense for the purposes of seeking advice.

He said: “People may apply different discount rates to the future, but they need an assurance that FSCS’ protection is clear, consistent and comprehensive.

“Harmonising the limits is one more potential step toward that goal.”