The pension landscape has changed dramatically over a relatively short period. This is typified by the increasing scarcity of final salary pension schemes available in the workplace, with employers growing more and more reluctant to maintain such long-term pension liabilities. As the sustainability of final salary pension schemes that were previously considered ironclad became subject to scrutiny, various independent financial advisors (IFAs) across the UK began targeting pension holders enrolled in defined contribution workplace schemes. This scenario proved catalytic for the widespread mis-selling of final salary pension transfers into unsuitable self-invested personal pensions (SIPPs).
Since the pensions freedom of 2015, the Financial Conduct Authority (FCA) has struggled to keep pace with the rate of change in the final salary pensions sector. The regulator has been repeatedly criticised for a lack of action regarding the misconduct of IFAs and third-party introducers involved in high-profile transfer scandals such as the British Steel Pension Scheme (BSPS).
FCA Turns on FInal Salary Pension Transfers
However, over the last year the FCA has attempted to rectify its mistakes by putting a stop to final salary pension transfer activity at the source. Restricting culpable IFAs and pension providers from conducting their regular business and working to reduce the number of service providers willing to perform final salary pension transfers on a holistic basis, has become the regulator’s new mode of operation. This has been broadly applauded, as more and more service providers willingly agree to suspend circumspect aspects of their business.
The financial media has generally acknowledged that these actions have contributed to a final salary pension transfer market slowdown, which means fewer individuals are moving funds from their workplace pensions into a new SIPP portfolio. A concerted media push to highlight the dangers of financial scamming has also improved awareness of the issue and reduced the number of individuals willing to risk their retirement savings in uncertain new investment products. Yet there has been little evidence to prove that such a market slowdown exists, until now.
Several professionals active in the pension sector have admitted that final salary pension transfer activity is beginning to reduce. The director of technical services at Dentons Pensions, claimed that:
‘Our new business is around 15% from [final salary pensions], and this has dropped marginally from last year.’
Beleaguered SIPP provider James Hay has also reported a drop of 20% in new clients in the first half of this year. The firm has been covered prolifically in the news recently, with several customers coming forward with pension compensation claims regarding final salary pension transfers into unsuitable SIPP investments.
Tom Selby at Money Marketing noted recently that final salary pension transfers seemed to be reaching peak activity, and that we should anticipate SIPP providers and IFAs becoming so concerned regarding long-term liability for financial complaints that the service may simply die out. This is certainly the case, as successful service provider Mattioli Woods recently chose to voluntarily suspend final salary pension transfer services claiming this lucrative market was no longer worth the risk.
Final Salary Pension Compensation with Money and Me Claims
Money and Me Claims is a specialist financial claims company with substantial experience in final salary pension transfer claims. We have an exceptional track record of guiding compensation claims to fruition, helping clients receive up to the maximum £50,000 pay-out from the Financial Services Compensation Scheme (FSCS), and substantially more for claims levied with the Financial Ombudsman Service (FOS).
If you would like any more information, please do not hesitate to contact us.