Advisers predict pensions victory

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The Independent Online
A legal bid by independent financial advisers to scupper new compensation guidelines for pension transfer victims reaches its climax today, but the IFA trade body was claiming victory last night.

Garry Heath, chief executive of the IFA Association, said yesterday he was "quietly confident" a judicial review of the rules would vindicate his organisation's opposition to them.

The High Court will deliver its judgement today on the guidelines, set by the Securities and Investments Board, the City's top financial watchdog.

A judgement in favour of the IFAA will delay for many months compensation for up to 1.5 million people who may be entitled.

A reversal for SIB would spark action against insurers, as trade unions and solicitors acting for many claimants go to court to obtain redress.

The GMB union said yesterday it was planning to issue a series of writs on behalf of hundreds of members it claimed had been wrongly advised to opt out of their company pension schemes and into private ones.

Mr Heath said: "I have not been given a preview of the judgement, but anyone who sat in the High Court during the hearings last month could not have come away with any other impression."

His comments came as evidence emerged of the scale of support by large insurance companies for the IFAA's legal battle against the SIB.

Mr Heath said insurers were funding two thirds of IFAA's £300,000 legal bill. Donations of up to £30,000 have been made, although he declined to name any companies.

"There are many life companies which see the guidelines the same way we do. We have received several large cheques from those who agree with us."

The judicial review, initiated by the IFAA, centres on its opposition to a requirement that independent advisers contact their clients and inform them they may have been wrongly advised to transfer out of company pension schemes.

Finding and then compensating the victims could cost the insurance industry up to £3bn, with IFAs potentially liable for at least a quarter of that amount.

IFAs say contacting clients will invalidate their professional indemnity insurance, which prevents them from soliciting claims against themselves.

Doing so would drive them out of business in the event of successful claims not met by PI insurers.

Mr Heath said: "We do not want to delay any rightful compensation for those who have been wrongly advised. If we win, we will immediately put forward a series of alternatives that the SIB can take up."

A SIB spokeswoman said it was unable to discuss the case against it until the outcome of the judicial review was known.