§ Adam PriceTo ask the Chancellor of the Exchequer how many individual general pensions mis-selling cases have been settled by compensation in the last year for which figures are available. [185766]
§ Ruth KellyThe Financial Services Authority, the Financial Ombudsman Service and the Financial Services Compensation Scheme are independent bodies.
I understand from the Financial Services Authority, the Financial Ombudsman Service and the Financial Services Compensation Scheme that the following pensions cases has been resolved in the last year.
473W
Number of cases at 31 March 2004 Pensions review cases carried out by the financial industry 23,600 Pensions review cases conducted by the Financial Services Authority in conjunction with the Financial Services 3,335 Compensation Scheme for those firms that are unable to meet claims against them. Pension cases resolved by the Financial Ombudsman Service (including those cases relating to personal pensions, pensions review, free-standing additional voluntary contributions schemes, annuity contracts and all other products with a pensions elements.) 6,265
§ Adam PriceTo ask the Chancellor of the Exchequer what checks are carried out to ensure that compensation in cases of pension mis-selling are equivalent to reinstatement of the original pension scheme. [185767]
§ Ruth KellyI understand from the FSA that in the case of pension compensation cases which are part of the formal Pensions Review, recompense is not normally payable in the form of cash but by addition to the individual's pension. The term "redress" is apposite rather than the term "compensation".
Where a loss has been caused by non-compliant advice and reinstatement into the original pension scheme is available at fair cost, then an offer of reinstatement must be made.
Otherwise, the normal method of redress is by topping-up the individual's personal pension. The value of pension and other benefits that would have been available from the original pension scheme, is compared with that from the personal pension after allowing for any relevant differences in the individual's pension contributions. The shortfall in value is added to the personal pension as redress.
As the level of benefits and risks differ between pension arrangements the method of working out the value of benefits needs to allow for this. Under the Pensions Review, which reviewed sales of personal pensions between 29 April 1988 and 30 June 1994, and which is now virtually complete save for relatively few difficult cases, the following method and checks applied:
To ensure that benefits provided by the personal pensions were equivalent in value to those provided by the original pension scheme, the method of valuation was specified in regulatory provisions using actuarial methodology together with assumptions about future investment return, inflation and longevity.These assumptions were based on independent actuarial advice, confirmed by the actuarial profession and regularly reviewed.Where other assumptions were needed about the individual's particular situation, either standard amounts were specified in the regulator's provisions or sufficiently important assumptions were required to be disclosed to the individual so that he or she could question them and provide further information if available.Firms were required to confirm that the redress complied with the regulatory provisions for each case and also to carry out audits of their review process and results.In addition, firms were subject to supervisory checks by the regulators.If a consumer was not content with the offer made and was unable to resolve his or her concerns with the firm, he or she had the right to complain to the relevant Ombudsman, the normal time scales for complaints having been waived.General pensions complaints are dealt with by the Financial Ombudsman Service for solvent firms and by the Financial Services Compensation Scheme for firms that are unable to meet claims against them.