Recourse for Wrong Advice?

Bluey1295

Some years ago, in my ignorance of things financial, I was persuaded to leave a Final Salary pension scheme with a major Bank and transfer it all to a new personal pension. This was mainly on the basis that I was led to believe that my bank pension was 'frozen', and the several pages of predictions (at much higher rates than they are given now) made the new pension look very tempting. Since doing that, just about every non-financial adviser I spoke to about it threw their hands up in horror. "Whatever did you go and do that for?!!". Anyway I tried to get some redress (ie return it all to my previous Final Salary scheme) by going to the Financial Ombudsman, but because the 'adviser' did everthing by the book, there was no case to answer, and the transfer back wasn't an option. My complaint was that if non-trained people could give a stright and emphatic 'Keep it in the Final Salary scheme', why didn't the so-called expert?
In addition to this, and before taking the case to the ombudsman, I instructed the adviser to make a change to the pension after learning from the personal pension company that the fund was underperforming, but later discovered the adviser never made a 'switch' on my behalf.
This was some years ago. I now discovered that during the intervening years, this very same adviser has been raking in thousands of pounds in commission from the new personal pension provider! I asked the pension provider for it to be returned, but they said they couldn't, and so I am proposing to ask the financial adviser for it to be paid back.
Reading this website it seems a) the commission is not mine b) commission is only due for actual advice given c) ther is an alternative.
If the commission is not mine to put towards my pension, what can I do? I would rather it be given to a charitable cause than remain in the hands of what I see as dishonest brokers.
Any advice would be greatly appreciated.

polybear

Hi,

If you've tried the "mis-selling" route and been unsuccessful (if the Financial Ombudsman won't back you up then you've got problems imo) then maybe you could investigate the possibility of stopping payments (or reducing them to an absolute minimum otherwise) and opening up a new account (watch out for any initial charges etc. though) with either the same provider or another one (this would have the advantage of spreading the risk). Such action would depend on how long to retirement etc etc. so you need to look into it carefully.

I'm guessing (I'm no expert) that by stopping or minimising payments into the pension that the Financial Adviser arranged will minimise/stop any future commision payments.

p.s. I've been lucky in sorting two pension mis-selling compensation claims in the past. The first took a bit of time (Barclays) - they tried to make out there was no case at first but then rolled over; the second (Prudential) was so easy it was unbelievable. Have they sent you a copy of the application forms you signed? Did those forms state you had been advised that you may be better off with your current pension provider? If not, go back and try again....and again.....

Good luck.
Brian.

dunstonh

and the several pages of predictions (at much higher rates than they are given now) made the new pension look very tempting.

They are not predications. They are projections using sample growth rates set by the regulator.

Since doing that, just about every non-financial adviser I spoke to about it threw their hands up in horror. "Whatever did you go and do that for?!!".

So, people that wouldnt be able to tell if the advice was good or bad think it was wrong.

Anyway I tried to get some redress (ie return it all to my previous Final Salary scheme) by going to the Financial Ombudsman, but because the 'adviser' did everthing by the book, there was no case to answer, and the transfer back wasn't an option.

So, in other words the advice given was deemed to be correct.

My complaint was that if non-trained people could give a stright and emphatic 'Keep it in the Final Salary scheme', why didn't the so-called expert?

The non trained people dont know the pros and cons, wouldnt have done a TVAS and have very little knowledge in that area.

This was some years ago. I now discovered that during the intervening years, this very same adviser has been raking in thousands of pounds in commission from the new personal pension provider!

That would be unusual. Most personal pensions paid the amount up front and after that it was just a small renewal amount on the regular contribution that may be a pound or two if you were lucky. Comission that was of course disclosed to you before you made the decision to proceed.

I asked the pension provider for it to be returned, but they said they couldn't, and so I am proposing to ask the financial adviser for it to be paid back.

You can ask but I wouldnt hold your breath. The adviser has no reason to refund it and it is against HMRC rules to rebate commission on pensions to you.

If the commission is not mine to put towards my pension, what can I do?

The commission is not yours. You have no legal claim to it.

I'm guessing (I'm no expert) that by stopping or minimising payments into the pension that the Financial Adviser arranged will minimise/stop any future commision payments.

It would stop the pence being paid to the adviser but it would be wise to make sure there are no guarantees involved before that is done.

p.s. I've been lucky in sorting two pension mis-selling compensation claims in the past. The first took a bit of time (Barclays) - they tried to make out there was no case at first but then rolled over; the second (Prudential) was so easy it was unbelievable.

Tied companies should never have got involved with pension transfers as their staff just didnt have the skills and you are letter sales people loose on a high risk transaction. You tend to find that the documentation that tied agents had on file for transfers was woeful and they have little choice but fall on their sword and pay up.

Have they sent you a copy of the application forms you signed? Did those forms state you had been advised that you may be better off with your current pension provider? If not, go back and try again....and again.....

Application forms only had the "advised" or "not advised" put on them from last year to allow FSA monitoring. Prior to that you didnt put anything on the application to say it was advice, direct to provider or execution only.

Basically, the stage Bluey is at now is that he/she has complained to the adviser and the complaint has been rejected saying the advice was fine. Then it was taken to the FOS who have investigated the advice and also said the advice is fine and all documtation was "by the book" as you say. These checks would have involved finding out what the critical yield was and if it was low enough to justify recommending the transfer. A higher critical yield would be harder to justify.

Seeing as you strongly believe you were mis-sold, you will know what the critical yield is and if that is justifiable or not. What was the critical yield? Without knowing that, any comments about whether it was mis-sold or not are just speculation.

If the critical yield is low enough to be justified against your risk profile but then investment returns dont give enough to meet that then that is no grounds for complaint. Investment returns are not something you can complain about.

There is also a bit of hindsight in here as well. I generally take the view that you assume a final salary scheme is best left where it is until you have strong evidence to show otherwise. A rule that most IFAs and providers (that still do it) will follow. However, back in the 90s investment returns were generally higher as was inflation so the investment option did look more attractive. Indeed, things could return to that mindset in future if inflation continues to rise and the caps on annual increases on the schemes are reduced.