Mis-sold pension claims have significantly increased in the United Kingdom, valuing up to double the number of claims made since the previous years. According to sources, it was disclosed that two notable pension firms operating in the UK should have settled annuity claims of more than a hundred thousand pensioners.
This was because they were mis-sold pensions that were curated for healthy individuals. Pensioners facing health issues like diabetes, coronary artery disease, or any other health conditions fell prey to mis-selling of annuity and missed a considerable portion of their retirement.
The media covered the scandal, and it made people aware of the wrongly sold annuities. The pension companies, Prudential and Standard Life, accepted the accusation after media coverage and accepted in their statements that a massive number of clients mis-sold a range of their products.
Defining Mis-sold Annuity and How it Affects You
A type of financial product bought by people on purpose for their retirement is known as Annuity. Usually, a person who is about to retire from their job hands over their pension pot to a company dealing with the annuity. They put their trust in the firm in hopes that they will receive a regular income on a monthly basis, guaranteed for a lifetime.
There are two different scenarios taking place for monthly returns; one occurs when the individual is alive and lives longer than expected. They continue to get the monthly income guaranteed to them for as long as they live. In many instances, retired pensioners have received a sum total of the monthly payment that was greater than what they had saved.
Suppose the same individual dies before what was expected. In that case, the remaining balance passes on to the relatives of the person or the insurer, as the case may be. A case may occur where an incorrect financial plan is sold to the client of the annuity firm due to unavoidable circumstances or insufficiency in providing enough information regarding the plan. This can be termed as annuity mis-selling.
Annuity plans are explicitly made and differ from client to client. A plan that suits best for one client may or may not be suitable for the other, which is valid for all financial products. An expert financial advisor will not sell any plan to them; instead, they will take the time to understand the client, their health conditions and then suggest a plan that would work perfectly in their favour.
In 2015, the government announced adding flexibility in pensions for retired individuals. Due to this, many people went for the annuity option to receive a stable monthly income. But this affected the financial condition of the pensioners in the long run. This resulted in financial trouble for innumerable people to whom financial products were mis-sold.
Cost of Mis-sold Annuity
The Financial Conduct Authority decided to conduct an investigation on mis-selling pensions last year after the alleged accusations made on large pension organizations. Even though the names of such financial companies that were a part of such wrongdoings were not revealed, the regulator disclosed that a loss ranging between 120 euros to 240 euros was incurred by a pensioner at an average having 25,000 euros as a pension pot.
This sums up to a total of 6,000 euros for a general retirement in 25 years. This average can be double or triple in real terms that a client loses due to mis-sold annuity. Suppose the same people could receive the right amount as their annuity. In that case, their lifestyle could have been more comfortable, as a mis-sold annuity deeply impacts their pension pots.
Identifying Mis-sold Annuity
There can be many instances that can help you identify whether you are a victim of a mis-sold annuity and whether you are entitled to receive a compensation claim based on that.
Lack of Options Given
Your annuity provider might suggest an ideal annuity plan and encourage you to purchase it as the best deal that you cannot find elsewhere. But it is essential for the annuity provider to give you a variety of options to choose from and not just stick to one plan. If you were not given a selection of choices, then your case can be considered mis-selling.
Health Factors not Considered by Annuity Provider
The client’s life expectancy has to be considered while advising an annuity plan. If there are any health conditions that can significantly impact life expectancy, such factors are important to note. If there is a failure on the part of the annuity provider in considering such factors, you will receive a lesser monthly income than you deserve. This is also a case of mis-selling.
Incorrect Standard Rate of Annuity
Standard annuity rate is applicable for all people who live up to a standard age and offer an expected payout every month. But this rate is not suitable for people who have deteriorating health conditions who may not live up to the standard life expectancy.
There can be several hidden charges applicable to the annuity plan that your financial advisor must inform you about before you agree on the plan. If you were not informed about such costs, the chances are that they mis-sold the annuity plan.
Claiming a Compensation
If you are a victim of mis-sold annuity, the chances are that your financial advisor wasn’t efficient and lacked in giving you detailed information or didn’t consider your health conditions for a suitable plan. Handling annuity compensation claims can only be made by experts who have previously helped clients of annuity companies who have mis-sold their products to them.
These professionals have expertise in the field of finance, ideal for handling your annuity claims. Although a complex procedure, an expert will ensure that you are adequately compensated if you were given less compensation than promised or recently discovered more terms and conditions of the annuity firm that they did not tell you initially. All you have to do is be well aware of the situation and make intelligent decisions.