The Financial Services Compensation Scheme (FSCS) has drawn attention to instances where people lost their pension savings as a result of receiving unsuitable advice about pension consolidation and has assisted them in obtaining refunds.
Every year the FSCS receives reports from individuals who have suffered the loss of their pension savings due to poor advice.
Gill, a 61-year-old from Pewsey, Wiltshire, received £41,682 in compensation from FSCS due to receiving unsuitable advice in 2015. She was advised to consolidate several private pensions into a SIPP (Self Invested Personal Pension).
She trusted her financial adviser who advised merging her pensions into a SIPP. But as she neared retirement at the age of 60, she learned that her money had been invested in risky, long-term investments like parking lots and hotels abroad, with limited access until the age of 75 and a decline in value.
Gill found FSCS through Pension Wise and Citizen’s Advise Bureau, and she was able to successfully file a claim against the advising company and she received a refund of £41,682.
Gill says: “I had always planned to retire at 60 but without the compensation from FSCS, I wouldn’t have been able to do this. I would have had to continue working for longer. I was thinking that I might have to get a part-time job to tide me over.”
Karl Hayes from Peterborough, who was 66 at the time, lost roughly £55,000 when he converted three pensions into a SIPP in 2013. However, when the adviser he had used went out of business earlier this year, FSCS stepped in to assist him in recovering the entire sum.
Another case saw 67-year-old Scottish resident of Midlothian George Halliday win £48,000 in compensation from FSCS having received bad advice in 1992 leading him to transfer his final salary pension into a SIPP.
