The Financial Services Compensation Scheme (FSCS) has already surpassed its payout limit for pension transfer claims this year. As a result, firms will pick up a £69m levy to meet the higher than expected volume of upheld cases.
At the start of 2018, the maximum levy of £75m was forecast and paid by firms. Despite the number of Sipp claims falling below the forecast in the second quarter of the year, the number of cases upheld are at an all-time high.
The compensation scheme recently changed its guidelines on calculating British Steel payouts. The huge mis-selling scandal will see scheme members whose claims are upheld receive the maximum compensation amount of £50,000. As a result, the FSCS could see a huge amount paid out to steelworkers at the end of 2018 and into 2019.
Transfer claims and CMCs
The FSCS has also attributed the unexpected increase to claims management companies (CMCs). CMCs have taken on more Sipp mis-selling cases in 2018, resulting in a higher uphold rate.
Consumers use a CMC if they do not have the time. However, they should always ensure they know what the service entails and the fees before entering into a contract. Also bear in mind that CMCs have no more power than the average consumer. While they can make the process easier by handling it for you, they are unable to escalate the case in the event of a rejection.
If transfer claims are more than £50,000, we would urge consumers to seek alternative routes than the FSCS. This is because the maximum payout would not meet their losses.
A solicitor, unlike a CMC is equipped to pursue other options, including litigating transfer claims in court, with no maximum amount on the payout that may be awarded. Each case is unique and the FSCS cannot properly compensate many mis-selling victims due to the maximum it can offer being lower than their losses.
If you invested more than £50,000 in a Sipp that may have been mis-sold, get in touch. We can advise on the best route to ensure you receive fair compensation.