The Association of Independent Financial Advisers has slammed the decision by the Personal Invest...
The Association of Independent Financial Advisers has slammed the decision by the Personal Investment Authority to pay out more compensation to 25,000 victims of pension mis-selling.
It criticises the need to reopen cases in which payment has already been made to investors who controacted out of SERPS and believes there is no reason why IFAs should have to re-evaluate cases in where compensation has already been paid.
AIFA spokeswoman Tracey Mullins says: "If the regulator has given guidance on calculating redress that was later found inaccurate why should IFAs reopen cases if they followed guidance from the regulator?
"The principle of reopening closed cases is something that concerns us because IFAs have completed cases in good faith following the guidance on how to do these calculations."
FSA officials have defended the PIA's decision by stating the original redress procedure was based on principles created several years ago.
The decision to make additional payments forms part of Phase II of the pensions review, which recognised in January 1999 guidance was relevant only to people in or close to retirement, namely those covered by Phase I of the review.
The second phase - which commenced that January with an advertising campaign - resulted in more than one million investors contacting the regulator concerned about pension mis-selling.
Of that figure approximately half a million were transfers from company pension to a private pension.
By September most firms had begun Phase II of the review, however, the PIA halted the process in December 1999 and announced new guidance would needed to be published in March last year.
FSA spokeswoman Jackie Blyth said: "The additional compensation relates to less than 25,000 cases. The total redress for mis-selling of pensions is £11.5bn of which these additional payments total £80m."
IFAs - among others groups in the financial industry - are being consulted on how to make up this shortfall but Blyth says the costs are likely to be spread across the industry.
"It will come through a levy of all firms but weighted towards the life groups. Our concern is to make sure all consumers get appropriate redress."
The need to offer better compensation is the result of an audit conducted by the regulator into compensation payments and a discovery people people were not being paid enough redress, adds Blyth.
"It was raised by a number of firms involved in the review. On the basis of that we stopped the review but some cases had already been done and those are the cases that we are looking at," she adds.
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