As the vast majority of us are aware, the financial claims industry is now a major part of our lives, with PPI never far from the news. Sadly, more and more financial products are being closely scrutinised, resulting in previous advice surrounding the sale of many products proving to be more advantageous to the financial institution, rather than that of the customer……….possibly you!
In general, most financial advice has been provided with utmost faith, however over the last decade, numerous interventions by the financial services regulator, have highlighted fundamental shortcomings in product design and how such products have been distributed to the general public.
Despite numerous financial bailouts, major financial institutions have often been proven to put the interests of shareholders and key staff before that of their customers. And remarkably, despite being ordered to rectify matters, some have not adhered to their obligations set out by the financial services regulator.
As a result, the financial claims industry is not only here to stay, but set to expand, as more and more examples of malpractice are uncovered.
Self Invested Personal Pensions (SIPP’s):
Often set up to hold high risk, illiquid, underperforming alternative investments, with higher charging structures. In January 2013 the Financial Services regulator published alerts confirming what an IFA’s had to do to ensure their advice was suitable. In the vast majority of cases this advice fell short of what was expected of IFA’s, as many SIPP’s were advised to be set up without consideration of the underlying alternative investments that were held within the SIPP. This has led to hundreds (and soon to be thousands) of clients receiving compensation.
Small Self Administered Scheme (SASS):
Used in the same way as SIPP’s, and often set up in a contrived fashion to hold the same type of products.
Final Salary transfer:
With in-built guarantees it is rarely suitable to transfer this type of pension to any other form of Pension product or provider. However many were transferred into SIPP’s to hold alternative investments.
Free Standing Additional Voluntary Contribution (FSAVC):
In the vast majority of cases ‘in-house’ AVC’s have proven to be far more suitable.
Qualifying Recognised Overseas Pension Scheme (QROPS):
Although designed for people from the UK intending to retire overseas, many were sold on the promise of cash payment upon transfer, leading to substantial tax charges (up to 55%) and therefore poor advice.