The Financial Conduct Authority (FCA) has issued a call for pension passports and ‘wake up’ packs to be sent to people from age 50 with a clear summary on how to help them choose how to use their savings.
Why are the pension passports needed?
There is an increasing number of self-invested personal pension (Sipp) mis-selling cases coming to light. We definitely support this move as it will hopefully help educate people on the risks and choices they face.
The packs will be resent every five years until the customer has fully accessed their pension pot. Pension freedoms now give over-55s a wider range of choices over how they use their pension pot.
Being presented with the facts in an easy to understand way will hopefully help clear up a complex subject. It will also encourage people to engage in conversations with a trustworthy, regulated financial adviser. Advisers will be able to provide the best advice based on their personal circumstances.
The FCA also asked for firms to include one-year charge figures for drawdowns in pounds and pence in the key features illustration.
The regulator currently believes that charges can vary too much and can often be “complex, opaque and hard to compare”.
Why is the current situation difficult?
People now have more freedom that ever before with their pension. However, they are vulnerable to mis-selling, which puts their pension pot at risk. Unscrupulous advisers and providers approach people with investments that promise high returns, which is an attractive option. However, the high risks are not made clear. This is possibly due to a lack of available education at the start of the process.
As a result, we’ve seen an rising number of clients approach us with mis-sold Sipps. Some have lost their entire life savings. This is completely unacceptable.
If you’ve invested into schemes that have failed due to bad advice, our financial mis-selling solicitors can help you to secure compensation, even if your Sipp provider is disputing responsibility and litigation is required.