Mis-sold Annuities

An annuity is a policy providing a monthly income for life. When a person retires they buy an annuity once they have taken their pension fund.

The monthly income provided by the annuity depends on a number of things:

1) How much money is being used to buy the annuity? (All things being equal the larger the amounts paid in, the larger the monthly income.)

2) How old is the person buying the annuity? A younger person will receive less money per month than an older person due to their life expectancy.

3) Insurance companies will also consider the health and well-being of the person taking out the insurance and this will affect the annuity payments.

If the amounts of income you are receiving from your annuity is less than it would’ve been if you had been sold the correct annuity. You are entitled to claim the difference back. The calculation always depends on the facts of the case but the following examples are a good guide

Example 1
Mr X has a pension fund of £100k and is sold an annuity which provides £4,000 each year. Had it been noted that he is a lifelong smoker and suffers from high blood pressure, he could have taken a different annuity and received £8,000 per year if this had been taken into account. Over a 10 year period, Mr X has lost the income of £40,000.

Example 2
Mr Y has a pension fund of £75k and is sold an annuity directly by his pension provider. This provides an income of £3000 per year. He was not informed of his right to go to the open market for a better rate of income. He could have obtained an income of £4000 per year had he gone elsewhere. Over a 15 year period, Mr Y will lose £15,000 of income.

Example 3
Mrs Z has to take daily medication for a diabetic condition. Her annuity provider did not ask her anything about her medical conditions and this gives her an income of £300 per month for her pension fund of £75k. Mrs Z could have obtained an income of £450 per month if her medical history had been taken into account. She is £150 per month worse off as a result and in 10 years would lose the total income of £18,000.

ANNUITY MIS-SELLING SIGNS

  • When purchasing your annuity did you suffer from a medical condition which your financial adviser or pension provider failed to ask you about?
  • Did they fail to ask you about your lifestyle habits, such as smoking and drinking habits, before you took your annuity?
  • Were you not told of a better deal that could be found with another provider?

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Questions or Concerns

If your claim is settled immediately by the provider who gave the advice, then there is no limit on the size of compensation. However, if it proves necessary to go to the Financial Ombudsman Service (FOS) then there is a limit of £160,000 for complaints about actions by firms from before April 1st 2019, and a £350,000 limit for actions by firms from after this date. If the adviser or business who provided the advice has since ceased trading, then an application could be made to the Financial Services Compensation Scheme (FSCS). The limit to claims made to the FSCS is £85,000 per individual per claim.

Once a complaint is placed with a provider, they have 8 weeks to make a final response. However, in exceptional circumstances, cases may take longer to handle. If a case has to go to the Financial Ombudsman Service (FOS, or, the Ombudsman) for arbitration, then it may take longer. However, most cases do not need to progress to the Ombudsman.

If the firm you were advised by is no longer trading, you may be eligible to make a claim to the Financial Services Compensation Scheme.

Even if you do not have copies of the paperwork yourself for any reason, we can usually obtain it directly from the provider. As such, while it is very helpful, it is not always necessary to have a copy of the relevant paperwork.

Currently there is no final time limit on claims being made, though some claims may be time-barred.
 
A claim may be rejected by the provider if the advice was given more than 6 years ago, or if the investment was surrendered more than 3 years ago. However, while time barring exists in some situations, our dedication and experience means we may be able to put together reasons highlighting why your case should not be time barred.

You do not need to use a claims management company or a solicitor to make a complaint  to your lender, and if your complaint is not successful you can refer it to the Financial Ombudsman Service, The Pensions Ombudsman Service (in the case of Pension related claims) or the Financial Services Compensation Scheme (where applicable) yourself for free.

After you’ve signed our forms, our team will first obtain the relevant paperwork from the adviser. To do this, we will file a Subject Access Request (SAR) with the provider. They must then disclose all information they hold related to you. Our team will then draw up a detailed complaint report to send to your provider, on your behalf, as to why they believe you were mis-sold the investment.

If the provider rejects this complaint, your case may be referred to the Financial Ombudsman Service, Pensions Ombudsman or Financial Services Compensation Scheme, where deemed necessary and eligible. You will be provided with regular updates on your claim, and will be informed when an offer of compensation is received.

If your claim is rejected by the provider, you have the right to bring the complaint to the Financial Ombudsman Service, Pensions Ombudsman Service or Financial Services Compensation Scheme (where applicable) (FOS) for an independent review.

A Self Invested Personal Pension is a type of pension investment approved by the UK government. It allows experienced investors to personally manage the content of their pension investment, allowing them greater control over the ways that their money is invested. As such, it can appear appealing to many investors as they believe that they will make a better return on their investments. While the product itself is not a bad thing, and can be highly beneficial to some consumers, it is often sold to people who it is not appropriate for.

You can make a mis-selling claim against any advised investment through Financial Claims. If you believe your independent financial adviser provided you with inappropriate advice on your investment, you could be due compensation.