FT Adviser (02/05/2019) – Reduced transfer values are the most prominent issue when it comes to complaints about pension transfers, the ombudsman has revealed.
According to data revealed yesterday at a Westminster and City conference in London, the Financial Ombudsman Service has received 144 cases on transfer value changes since the introduction of the pension freedoms, which represent 43.1 per cent of all complaints about pension transfers.
From the total of cases received in this area, 95 have been closed, at an uphold rate of 48 per cent.
These are followed by 121 cases brought in relation to advice suitability, which had an uphold rate of 42 per cent.
Final salary pension schemes provide a cash equivalent transfer value which is valid for a three-month period. If the transfer doesn’t occur in this timeline, the pension fund trustees can review the figure, which might be higher or lower than the previous number.
This a trend the Fos has been noticing for some months now.
Alan Chan, director and chartered financial planner at IFS Wealth & Pensions, explained that the whole transfer and advice process takes time and often clients do not realise this.
He said: “Schemes are notoriously slow at dealing with transfer requests and although CETVs are guaranteed for a three-month period, they may not be sent to the adviser until a few weeks later so you don’t actually get the full three months.”
Mr Chan also noted that some consumers request the CETVs themselves well before they’ve even found an adviser they want to engage with, “without realising that the advice process can be lengthy, and rightly so for a complex area”.
He said: “We’ve had clients come to us asking us to ‘just sign their transfer papers’ and their deadline is next week.
“So these clients are expecting a five-minute job to just sign the papers rather than realising that it is the advice they are paying for and not the rubber stamp on their papers. So if they do not allow enough time, they could miss the deadline.
“To rub salt in the wound, they would then have had to pay a fee to the scheme for a second CETV only to find that their transfer value has fallen by thousands of pounds.”
Full article link: https://www.ftadviser.com/pensions/2019/05/02/transfer-value-reduction-dominates-fos-complaints/