These scammers all profited from cold calling and offering to move pensions but providing the investor with the incentive of a tax-free rebate from given up commission. I think the thing that distresses me most is the way that they hide lies amongst truths. Up until 2013 it was possible to give up commission (but only to improve – by reducing investment charges). As of 2013 commission was finally banned by the regulator and advisers had to agree fees with their clients for the work conducted. This can appear very similar to a commission (because the fee can be paid from the pension or investment), but it is very different in practice – in that it is determined and agreed between you and the adviser, not set by the product provider (manufacturer) of the pension (or investment).
Another thing to watch out for is the investments themselves – invariably unregulated investments are used due to the high charges that traditional (mainstream) funds do not have by comparison. In many instances, unregulated investments may as well be a bank account that a crook simply empties into their own account, usually via a network of other accounts.
Why I am particularly delighted is because usually the compensation bill is picked up and shared between the remaining adviser firms in the UK. Though not involved and most unlikely to ever recommend an unregulated investment, all are obligated to pay as demanded within 28 days by the FSCS – the Financial Services Compensation Scheme. So it’s a bill that in theory I won’t be having to pay, though I suspect that these crooks have managed to spend most if not all of the money, so we will probably have to anyway – such is life.
In short, take great care. I know its an industry full of jargon and a plethora of tables and charts, many of which are unhelpful, but get a sense of the adviser you are using and why he or she might be suggesting you change things that you have. There aren’t that many good reasons to move a pension – but reducing your investment costs would be one of them, perhaps better control and reporting if they are all in the same place, or access to some sensible investments, but frankly thats about it unless your old scheme is an utter rip off and isn’t delivering anything of value. Some old pensions do have valuable benefits and some have hefty penalties (still in 2018!).
Anyhow, at least 245 people are now legally entitled to compensation from those that defrauded them, which in my book is a good result.
You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email firstname.lastname@example.org