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Fears arise over pension mis-selling


The pension reforms being introduced in the UK in April will lead to an abundance of mis-selling claims, according to an announcement from Scottish Friendly.

Scottish Friendly, a savings and ISA provider, believe large numbers of pensioners will be targeted by salespeople with the only aim to separate them from their life savings. They believe more needs to be done to ensure pensioners and their savings are protected from a “wave of mis-selling”.

Scottish Friendly believe mis-selling is almost inevitable, and peoples pension assets may go on to be used outside the confines of the protection currently given by the FCA.

This announcement comes after a report from Metlife which claimed one in ten pensioners have already been the target of fraudsters.

The buy-to-let market is seen as a area of particular concern, as people with substantial pension funds may be encouraged to withdraw them, possibly on poor tax terms, to invest in a buy-to-let property or put down a substantial deposit on a mortgaged buy-to-let property.

Neil Lovatt, product director at Scottish Friendly, said:
“Short of a politically unacceptable U-turn on the policy, we need the FCA to take a more definitive stance to present strong negative risk warnings about using pension benefits for unregulated investments or doing so without detailed personal advice from a qualified financial adviser. Its predecessor, the Financial Services Authority did so in the past with precipice bonds and the structured capital at risk product regulations, albeit after the horse had bolted.

“We need strong and brave action from the FCA to close the gate whilst the horse is still in the stable. Doing so now can help to protect those in retirement so they can safely enjoy the freedom and flexibility the reforms were designed to allow.”

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