Article by Christina
It seems that there are relatively few complaints about independent pension advice.
The Financial Ombudsman Service (FOS) regularly provides figures on the number of complaints it receives. In the first quarter of 2024 almost 75,000 complaints were registered. That was a 70% increase on the same period last year. The majority of the complaints were about credit cards, followed by lending and then car loans.
What is interesting is the number of complaints about the advice and products provided by financial advisors. Whilst financial advisors contribute to FOS to pay for compensation, in reality the number of complaints is tiny. For example, there were only 1,500 complaints about either independent pension advice or annuities. That’s across the whole of the UK. Less than 25 of the total. In terms of investments, only 1,100 complaints were registered. About 1.5% of the total. And only 147 complaints about SIPP’s. Less than 0.2% of all complaints received by the FOS. All in all, these small numbers of complaints reflect the quality of professional financial advice being provided across the UK. It’s important that the FOS safety net is there to protect consumers, but the reality is that very few will ever have to use the system.
Online scam complaints.
Having said that, FOS have reported an increase in the number of claims and complaints about online investment scams linked to credit cards. It turns out that over 1,500 people were scammed this way in the first quarter of the year. Having seen investment scams online they used their credit cards to make the investments. Then tried to claim against their cards when they realised they had been victim of a scam. Only to find out that credit cards don’t offer protection about this kind of scam. Many of these scams involved buying cryptocurrency.
Do you need Professional Representation.
As we’ve already reported almost half of the complaints were brought by professional representative. Either solicitors or Claims Management Companies (CMC’s). But interestingly FOS has reported that only 25% of claims brought by professional representatives were upheld. By contrast 40% of claims brought by consumers themselves were upheld. It shows that you do not need to pay for advice and assistance when bringing a compliant or claim. You will also save yourself a considerable amount of money by not having to pay solicitors or CMC’s fees.
Pension threats?
Bearing in mind how few complaints there are it’s easy to see why Independent pension advice is important. According to Pension Bee over 30% of pensioners admit to overspending. The main reason is increased day to day costs.
You might also need independent pension advice if threats to the state pension are to be believed. In order to replace the current £221 a week state pension you would need a private pension pot of around £250,000. No wonder the state pension is such an important part of most people’s retirement plans. According to the latest research over 90% of retirees say that they need the state pension. Any reduction or means testing of the state pension would have far reaching consequences across the country. According to The Living Pension research from the Resolution Foundation another £110,000 pension pot is needed on top of the state pension to achieve a basic standard of living. That is now classified as £19,300 a year, up 60% over the last three years as a result of the cost of living (or cost of lockdown) rises. Without the state pension, a private pension of £360,000 would be required just to achieve this minimum.
