Defined Benefit  

Ambulance chasers turn their attention to pension transfers

Ambulance chasers turn their attention to pension transfers

Claim management companies are now focusing on financial advice, and trying to convince customers to seek compensation for pension transfers, Michelle Cracknell has warned.

Speaking today (22 June) at the presentation of the new code from the Pension Scams Industry Group (PSIG) in London, the chief executive of The Pensions Advisory Service (Tpas) said these ambulance chasing companies are offering pension reviews to customers and asking them if they transferred out of a pension scheme in the last 30 years.

She told the audience about a case that Tpas received this week.

She said: “The individual phoned us, not because he was upset - he had received £36,000 from a claims management company in respect of an incorrect pension transfer, so he was very happy - and he had questions about putting the money back in his pension.

“When the whole story unfolded, the fee that he had paid for getting £36,000 back was £6,000.”

Claim management companies, which were previously accused of cross-selling their books to pension scammers, are also using new tactics, such as cross checking for mentions of the word pension on Facebook with its users.

She said: “They are contacting people through SMS texts to say that you mentioned pensions on your Facebook account, and they think you have been a victim of a transfer that was incorrect.”

Ms Cracknell herself revealed she has received two of these messages already.

Nick Baxter, chairman of the Professional Financial Claims Association (PFCA), said he was not aware of this situation.

He said: "This is the first time I've heard this allegation being made, so I don't have any information on this"

Ms Cracknell also noted that steelworkers must be receiving similar calls and texts from claim management companies, since they had active discussions on Facebook about transferring out of the scheme and the quality of advice given.

Around 130,000 members of British Steel Pension Scheme (BSPS) had to choose to move their defined benefit (DB) pension pots to a new plan being created, BSPS II, or stay in the current fund, which would be moved to the Pension Protection Fund (PPF), by December.

Of the total members, 43,000 were deferred, which meant they could transfer out but had to seek advice in order to do so.

FTAdviser reported in November that several steelworkers appeared to be transferring out their pensions after being attracted to cheap deals by Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.

Active Wealth entered liquidation in February after the firm was told to cease any pension transfer activity by the FCA months earlier.

Ten firms suspended their pension transfer permissions following intervention from the Financial Conduct Authority (FCA) over BSPS.

maria.espadinha@ft.com