Emma Ann Hughes  

Ambulance chasers circling pension transfer scandal

Emma Ann Hughes

Emma Ann Hughes

With the Financial Services Compensation Scheme and Financial Ombudsman Service both raising their eyebrows about some Sipp recommendations, I can report the ambulance chasers are already circling.

Claims management firms are swift to tap into the next source of swift flowing cash into their pockets.

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Type pension transfer scandal into Google and the first four results you get are all advertisements promising “no win no fee” to make a claim against the adviser who recommended you ditch your old occupational scheme.

I hope a scandal can be avoided but clearly ambulance chasers think it is already nigh.

Given the volume of pension transfers currently taking place it is vital the Financial Conduct Authority spots and tackles more firms like Bank House.

You pay hefty regulatory fees and I am sure you and your clients expect the City watchdog to use that money to weed out firms failing to match your standards and make sure pension transfers are suitable.

But I would stress this is a situation that requires monitoring, spotting and swift action against rogue firms – not necessarily the creation of yet more rules.

Surely if we have learnt anything in life it is that you can make laws, but what is needed is the powers that be to take swift and decisive action against those who choose to ignore rules.

That is not to say the pension transfer rules don’t require a rethink.

As pointed out by the likes of AJ Bell’s Mike Morrison, the pension transfer rules need updating to recognise defined benefit schemes are no longer the gold standard they once were.

But I agree with the current rules that state pension transfers of more than £30,000 should be accompanied by advice to save some people from themselves.

To change that requirement would just open savers up to more scams.

With pension transfer values reaching record levels, it is vital that advisers do consider whether switching from one pot to another is suitable.

What is needed though is the regulator to make sure all those who claim to be offering advice are making recommendations that are suitable.

The regulator needs to spot those pushing dodgy investments, ditching the industry when they receive claims for compensation and shifting the bill on to individuals who followed the rules and are forced to pick up the tab for those who don’t.