Here's our weekly heads-up on the stories that may have caught your clients' attention over the weekend …
‘My dad's pension should have been £83 a month - he got just £8.36 thanks to a Scottish Widows error'
Headlines such as the one introducing this Telegraph article are enough to prompt any client to get in touch seeking reassurance about their pension arrangements. The piece tells the story of pensioner Derek Maguire, who for more than a decade before his death in 2014 was paid a tenth of the annuity he should have been receiving from Scottish Widows.
A spokesperson for the insurance giant told the Telegraph this was down to "human error", which meant the annuity was set up incorrectly, and Scottish Widows has since agreed to pay compensation to Maguire's family in addition to the underpayments.
According to the article, there is a history of pension providers underpaying customers due to "processing errors". AJ Bell senior analyst Tom Selby is quoted as saying: "Unfortunately, large insurers that have outdated technology systems all too often make errors - and it is ordinary savers who suffer."
The piece points out that many of Britain's largest insurers have grown by taking over rivals over the past few decades and this has led to individual firms running "an amalgamation of hideously complicated computer systems". "Errors often come to light during ‘spot checks' performed by firms or as a result of intervention by the City watchdog," it adds before quoting former pensions minister Baroness Altmann likening the annuity market to "the Wild West".
The true cost of being open with insurers
"How does the financial services industry treat people with mental health difficulties? Dismally," this Sunday Times article begins unpromisingly.
Clients who have previously suffered or are suffering with mental health problems may be alarmed to hear that a growing number of insurance providers are excluding conditions such as anxiety and depression from income protection and life insurance policies because of the high number of claims.
Ahead of Mental Health Awareness Week, the piece notes one in four adults and one in 10 children will experience mental illness, before going on to suggest these individuals could see insurance premiums rise by 200% - or simply refused cover. Of course, it adds, withholding any relevant information could mean a pay-out is refused if a claim is made.
Health Insurance Group managing director Brett Hill tells the Sunday Times: "Those who disclose episodes of poor mental health, even something such as postnatal depression or post-traumatic stress from a bereavement or a partner having an affair, face the possibility of having their insurance premiums impacted. But if they don't declare them, they run the risk of having a claim declined."
Bank of Mum and Dad is a major financial player - but could it be about to go bust?
Following the revelation last week the so-called ‘Bank of Mum and Dad' is effectively the UK's ninth biggest mortgage lender, this Express article wonders if such "intergenerational generosity" could be going too far.
"Just like any other financial services player," the article observes, the Bank of Mum and Dad is "steadily expanding its operations into other areas" - picking up the tab for everyday items such as food, mobile phones, clothing, cosmetics, car tax, rent and even pub money. It adds: "Worryingly, almost a fifth of parents say that supporting children aged 17 to 25 is putting a real strain on their own finances."
Highlighting a report from pensions advice specialist Portafina that shows a third of parents are also keeping their own parents afloat, the article concludes: "The Bank of Mum and Dad is doing some vital work, but needs to prioritise remaining solvent, just like any lender."
Joining London team
Previously at Old Mutual Wealth
Will introduce a cap on cost of care
Inertia has become a key policy mechanism