This article examines mis sold bonds and pensions, and takes a general view on what is happening to resolve it.
The Financial Services industry is getting something of a beating at the moment. It is having to cope with a global recession which has dramatically reduced the amount of business done and led to massive cutbacks in the returns they can offer to their clients, while on the other hand, many firms are being investigated because they may not have followed the rules when selling their products. Investors who have been wrongly advised are claiming bond compensation, while others are finding that their retirement plans are not as solid as they thought because they’ve been the victim of a mis-sold pension.
Bonds are the focus of the majority of mis-selling investigations right now. Every week another firm is investigated, fined or closed down because they have sold customers products which are not appropriate for them. In a recent, and extreme, case hundreds of investors have been compensated because they were talked into investing a 5 year bond with the promise of a return which would help pay their care home fees, should they need them. The products were unsuitable though, as the customers were generally aged in their 80’s and the advisors didn’t explain that if they needed the money before the term was up (and to be honest, it’s quite likely that people of such an age would want access to the money within 5 years) they’d have to pay fees and penalty charges, often resulting in them getting back less than they invested.
Although pension mis-selling might not be a hot topic, having lost some publicity to the bond compensation stories, it is still relevant to a lot of people. In particular, a change of the rules in 2006 has led to hundreds of thousands of people switching from company pensions into personal pensions and Self Invested Personal Pensions, or SIPPs. This has dark echoes of the scandal of the 1980’s, when people were advised that they would be much better off outside their company pension scheme and advised to make their own investments instead. The problem there was that the customers opting for it were badly advised – they weren’t told of the risks or that the returns might not be as good as they were promised, or they weren’t told that the advisor would be receiving a hefty commission for making the sale.
It’s good to see that the Financial Services Authority is now taking a very pro-active stance when it comes to clamping down on mis-selling. They are constantly tightening the rules, and companies have to comply or face some serious penalties. With the best will in the world, though, the problem of mis-selling will never be completely eradicated. Though it is possible to obtain bond compensation, or pension compensation, making sure that you are sold a product that meets your needs will avoid the examples given above so before you make your next investment do a bit of homework and check up on what advisors must and must not do when it comes to selling investments and pensions.
Article Source: http://www.compensationsecrets.co.uk/.
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