How to Avoid Being a Victim of Mis-sold Pensions

by on August 15, 2019

Unfortunately, thousands of UK senior citizens have been duped by unscrupulous investors to pull their retirement savings from safe, legal investments and invest it in unregulated investment schemes. These schemes are often unregulated but have the promise that investors will get high returns. Without any financial background, it is hard for you to determine the amount of risk in any investment and available regulations. However, there are several things you can do to avoid being a victim of mis sold pensions or get your cash back if you have already fallen victim.

How to Avoid Falling Prey

Avoid Buying ‘Guaranteed Returns’ Investment Plans

Every investment has a level of risk that is involved. In most cases, the investment plans that promise the highest returns have the most risk. Therefore, if a salesperson guarantees you sure returns, consider this a red flag. Genuine financial advisors will be willing to share the risks involved so that you make an informed decision.

Seek a Second Opinion

Do not be too quick to sign the contract document to transfer your investments. Instead, seek a second opinion from an independent financial advisor. An advisor may help identify red flag and inconsistencies in the investment plan. Only invest after the second opinion gives the plan a nod.

Check for Hidden Fees and Clauses

Several mis sold pensions have hidden charges that your advisor may knowingly fail to tell you. They include set up fees, platform charges, advice charges, and set-up fees. Others put controversial clauses in the contract to protect themselves on your behalf. Read through the contract document, even the small print and ensure you understand everything. Seek explanation in areas you do understand.

Insist on a one-one meeting with a Financial Advisor

Do not make pension investment over the phone or on internet chat programs. Instead, insist on face to face discussions with the advisor. A good number of investment scams start with a cold call. Many of the sales are also concluded on the phone too. A good advisor should not just sell you the plan; he or she should check your financial background and goals. Besides, he should ask about your appetite for risk. Do not act on high-pressure sales tactics and only sign the document when you are satisfied.

How to get your Money Back after a Mis sold pension

If you are concerned that you may be a victim of a mis sold pension, you could pursue a compensation claim against the provider of the investment plan or the IFA involved in the investment. You can pursue the claim yourself or get claims advice from a professional financial firm that deals explicitly with pensions. The specialist will ask for your statement and check if there is a problem with the investment plan. Where the advisor recommends pursuing the claim, you can do it yourself or let the firm do it on your behalf.

If the investment company has not rectified the complaint or is nowhere to be seen, you may raise the issue with the Financial Ombudsman Service. FOS is a free service. It can order the firm to give you some form of compensation including the interest on cash which you missed out. Time is of the essence when making a claim. You have six years from the date you transferred your pension into a plan to make a claim. However, you can still raise a complaint with the Ombudsman in three years after you found a reason to complain.

If the investment company is at fault, the Financial Services Compensation Scheme can compensate you the monies lost through negligence, misrepresentation of facts and fraud. 

Always get claims advice before starting with the process.

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