Advisers in the UK providing poor
pension switching advice to consumers are in for costly surprise,
warns the Financial Service Authority (FSA). The regulator’s
warning comes after its completion of follow-up work to improve
pension switching advice that will see a number of firms required
to carry out past business reviews dating back to April 2006.
The FSA estimates that the reviews
will result in more than £150m ($230m) in redress to customers. It
believes this total is likely to increase once it has completed
discussions now underway with a number of other firms.
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“Although many firms have changed
the way they operate, we remain concerned that some continue to
give poor advice,” said Dan Waters, the FSA’s director of conduct
risk.
“Ignorance is no defence and we
will continue to focus on the high-risk firms through intensive
supervision.”
During its recently completed follow-up, the FSA reviewed 251
cases from 12 small advisory firms and 10 relationship-managed
companies including two major banks. Suitable advice was found to
have been given in 88 cases (35%), unsuitable advice in 85 cases
(34%) and unclear advice in 78 cases (31%).
