Consumer Focus criticises standard of pension advice
Individuals looking to set up a personal pension plan are at risk of receiving poor advice and paying hidden commission, according to Consumer Focus.
The watchdog has called on the Financial Services Authority (FSA) to "get a grip" on the market for these products after an online survey revealed many people are finding it hard to get a good deal.
Consumer Focus suggested too many consumers are being told by independent financial advisers (IFAs) to switch to a different plan which could leave them worse off in retirement.
On top of that, it continued, the trend around charging ongoing fees, known as 'trail commission', is increasing in advance of the expected ban of the practice by the FSA.
Disclosure of costs and charges is also "complex and opaque", making it virtually impossible for people to shop around effectively, the watchdog added.
To remedy the situation, Consumer Focus called on the FSA to ensure companies open their books while strengthening measures on price disclosure and carrying out a market-wide investigation of the churning of pensions to identify examples of mis-selling.
Commenting on the survey, pensions expert Dr Ros Altmann commented: "Good advice is definitely worth paying for, but unfortunately many in the mass market - especially those with small pension pots - do not get good advice at all.
"They are often encouraged by advisers to transfer to another pension company and do not realise how much commission this will generate for the adviser, nor do they understand how trail commission works and that this adviser will keep receiving money every year from their pension fund, even if they no longer speak to the customer at all."
Use the Myfinances.co.uk comparison tables to find the best deal on a pension or annuity
Comments
Newsletter sign up