Customers who tried to move their pension savings between providers were improperly advised in almost one in six cases over the last two years, Britain’s Financial Services Authority said.
“Several” companies will now face enforcement action after the financial watchdog reviewed 500 cases at 30 companies, the FSA said in a statement today. Advisers charged customers without reason and failed to explain the risks of differing pension strategies, the regulator said. It will now write to 4,500 advisors to ensure they consult their clients properly.
“We are concerned at the variable results across firms,” Dan Waters, the FSA’s director of retail policy, said in the statement. “As a result, we are taking targeted action in relation to firms giving pension switching advice to deal with the risk of unsuitable advice on past and future sales.”
The U.K. government changed the pension system in 2006 to encourage people to save more, and plug a 57 billion-pound shortfall ($83 billion) in retirement savings. Since then, it’s possible to have a company pension program and a personal plan at the same time, and also draw pensions while still working.
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