Monday, September 21, 1998 Published at 16:45 GMT 17:45 UK
Business: Your Money
Firms under fire in pensions review
Review of pension mis-selling to older workers almost complete
The UK Treasury has hit out at financial advisers for dragging their heels in the UK's pension mis-selling review.
As phase one of the review, which examines 'priority' cases, comes to an end, the Treasury's Economic Secretary Patricia Hewitt has criticised some financial advisers for their stalling tactics.
"I want to see all firms prepared and ready to go at the start of next year. There must be no return to the foot-dragging which accompanied the start of the phase one review."
"Frankly, I am appalled at the attitude of some independent financial advisers to the task ahead. Their campaign to stop the phase two review shows a total disregard for their customers' welfare and does them no credit," Ms Hewitt said.
The Treasury has stated that all financial advisers and pension providers should have reviewed and compensated all their 'priority' cases by the end of this year.
The mis-selling review covers around 600,000 pensions sold between 1988 and 1994.
The majority of people affected were those persuaded to move out of company pension schemes and buy private personal pensions.
In 1994, the independent financial watchdog, the Securities and Investment Board, ordered a review of the practice.
When the Labour government came to power in May 1997, the then Economic Secretary Helen Liddell met the firms involved to discuss the lack of progress, and the "naming and shaming" of firms began.
Phase two of the review, which concerns individuals who were under 35 when they were wrongly advised to opt out of their employer's pension scheme, gets under way in January.
Ms Hewitt welcomed the progress that had been made in dealing with priority cases.
She published details of the 29 firms involved in mis-selling. Only seven of these had failed to resolve fewer than 75% of their priority cases.
Four of those seven are networks of independent financial advisers - DBS Management, Countrywide, Financial Options and Burns Anderson.
The other three providers are Gan Life, Abbey Life and Windsor Life.
"These results show what can be accomplished when real effort is put in by these firms. Every one of these firms must now focus on the deadline of the end of the year for completing their priority reviews," Ms Hewitt said.
Over the last year, the Personal Investment Authority (PIA) has fined 150 firms almost £5m over review failures while £1.4bn in compensation has so far been paid to investors by financial advisers, insurers and banks.
Recent fines related to pension mis-selling levied by the PIA, include:
In July and August 1998, the PIA also fined 87 firms of independent financial advisers a total of £335,750.
Meanwhile, an imminent report containing new evidence of ongoing pension mis-selling has been dismissed by regulators and the pension industry.
The report, by actuarial firm Bacon and Woodrow, will claim that 'top-up' pensions, or free-standing additional voluntary contribution schemes (FSAVCs), are being sold to investors when better options to boost contributions are attached to their existing company schemes.
The report says high charges levied on FSAVC contributions make them unattractive compared to many company plans.
However, the PIA has said drafts of the report are based only on hearsay and comment and lack concrete evidence.
Major companies like Tesco, Sainsbury and British Airways have been among those to complain to regulators about FSAVCs.
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