2018 pension mis-selling timeline
2018 started with headlines focusing on the British Steel Pension Transfer crisis
, which had rolled on from the previous year.
It was becoming more and more evident that some pension scheme members had been wrongly persuaded to transfer away from the British Steel pension scheme, with some advisers using fear tactics and ‘chicken and chips’ dinners to tempt people into making decisions not in their best interests.
January also saw the news that the FSCS was seeking extra funding to deal with the SIPP claims scandal, which had been ongoing for over a decade and only seemed to be getting worse as more and more people realise they had been mis-sold SIPP pensions and high-risk investments.
Premier Financial Solutions was found to have mis-sold Rimondi Grand hotel investments.
J Richfield was declared in default with the FSCS
InvestUS explored winding up options
In March two of the biggest headlines dropped.
Firstly, US prosecutors had charged Beaufort Securities with fraud.
As details came through, it was revealed the whole saga included an undercover FBI sting, involving people related to Beaufort, and a painting by Picasso!
Secondly, The Lifetime SIPP Company entered into administration, with £millions under management.
Other headlines included data that said 1 in 7 over 50s are targeted by pension scammers.
With a quarter of the year down, the door was opened for compensation for clients of collapsed DFM strand Capital.
High-risk investment Global Forestry Investments was reported in difficulty, as there were no signs of returns from Belem Sky.
May might have seemed like a slow month for news headlines about pension mis-selling, but not if you were a former client of Beaufort Securities. This was the month it was announced that some clients’ losses may well exceed compensation limits, meaning some people may be left out of pocket because of negligent actions.
Elsewhere, pressure was building on SIPP providers to take more responsibility over unregulated investment products.
The mid-year point started with a bang, as it was announced that there had been a 37% increase in SIPP related complaints to the Financial Ombudsman
, leaving no illusions about whether the industry had a SIPP advice problem.
The FSCS also told financial advisers to get better PI insurance to deal with complaints, and Greyfriars Asset Management closed the doors on its DFM business.
Despite pressure from MPs and advisers, the proposed ban on cold-calling about pensions was delayed.
Data released told how the FSCS had paid out £112 million in compensation for SIPP related complaints over the previous financial year – a huge amount!
It was also revealed that the FCA has been peering into the business of 152 firms over concerns about bad financial advice.
Most regulated financial firms require Professional Indemnity insurance (PI) to cover themselves against claims made against them for negligence. In August 2018, it was reported that insurance companies may be forcing advisers to pay more, in part due to the ongoing pension advice scandal.
The FCA also vowed to get tough on advisers who mis-sell pension transfer and investments in the wake of the British Steel pension scandal.
The end of Summer also saw the FCA’s ScamSmart team launch a campaign to help make people aware of pension cold-calls and scams.
With the year drawing into the fourth quarter, the FSCS announced that it was seeking £25m for claims against The Pensions Office
. The firm was linked to multiple cases of unsuitable SIPPs and high-risk investments.
October 2018 was a busy time for headlines.
One of the major firms connected with the Elysian Fuels scandal – Future Capital Partners, entered into liquidation.
Then, slightly scary data came out. A study by Royal London told how transferring a final salary pension as much as 10 years before planned retirement could mean losing as much as half of that retirement pot over time.
With defined benefits pensions having increased over recent years, the news may have shocked many who believed they were making the right decision over their transfer.
Later-on in the month, STM group bought Carey Pensions, which was facing down claims that it neglected certain duties over high-risk pension investments through its SIPP platform.
Greyfriars Asset Management, a firm linked to high-risk investments through one of its portfolios (portfolio six) went into administration.
And finally, SIPP provider Berkeley Burke lost its judicial review against a Financial Ombudsman decision from 2014, holding it responsible for due diligence failings, which may have consequences for other SIPP firms in the future in similar cases.
November brought a few important figures to light about the size and scale of pension mis-selling and claims.
The FSCS came under criticism for the way it was dealing with claims relating to the British Steel Pension scandal, with compensation offers described as ‘derisory’. A date was also set for some MPs to meet steel workers effected by the pension issues.
Meanwhile, the FOS revealed in the wake of October’s Berkeley Burke news, that it has received over 1000 complaints about SIPP providers.
Similarly, large figures cropped up at the FSCS, where it was revealed that 1400+ claims had been received in relation to Beaufort Securities.
Meanwhile, some people in the market were shocked to find that pension transfers had increased by 587% in two years, despite rules that said they should rarely be considered suitable for most people. It was later revealed that over 3000 firms were set to be quizzed over transfer advice, and the FSCS was looking to levy another £69m to pay compensation or pension mis-selling.
The FCA released information from its recent investigation into several firms that may have been involved in mis-sold final salary pension transfers
, to find that of the file reviews it conducted, that less that 50% of the advice people were given to transfer their pension could be confirmed as suitable.
The FOS also noted that it was giving staff ‘extra training’ to deal with a possible wave of mis-sold pension transfer claims in 2019.