At the end of last year the Financial Conduct Authority (FCA) identified that customers of Sesame who had received advice to switch their pensions after April 2006, when certain pension restrictions were removed, may have been mis-sold the product into which they switched.
In particular during 2007/8 significant numbers of investors switched to new products such as Self Invested Personal Pensions or SIPPs as they are commonly known. The FCA identified a number of areas of concern including whether the potential for tax liabilities was properly identified and whether the potential to generate commission resulted in the wrong product being selected. In particular hybrid SIPPSs which were less beneficial than the existing life company pension.
Investors did not understand the wider range of investment possible within the SIPP meant increased risks. The FCA believes as many as 16% of pension switches may have involved unsuitable advice being given, with extra and unnecessary costs in almost 80% of cases, unsuitable funds recommended in 40% of cases, will offer benefits without good reason in 14% and the failure to identify the need for on-going management review of the investment in 26% of cases.
If you have switched to a product incurs additional costs and is more expensive than for examples stakeholder pension, or with loss benefits which doesn’t reflect your own attitude to risk in your personal circumstances you should consider taking action to put you back in the position you should have been in had you received correct advice.
Last year the FSA (the FCA predecessor) fined Sesame £6 million for failing to ensure that investment advice given to pension switching customers was suitable. The product in question was Sesame’s “Key data” life settlement products in which some 426 customers invested between the summers of 2005 and 2009. If you are one of those who invested within the last six years you may still be able to mount a legal case before limitation of action expires.
However it seems likely Sesame were not the only intermediary involved so this may affect others.
We are looking into this and if you would like us to do that on your behalf contact the group and commercial litigation team on 0808 175 7793 or fill out the enquiry form