Insurers rapped over mis-selling report
Sunday 12 October 1997
In a report released last week to draw the heat away from the Treasury's latest onslaught against providers who have failed to meet targets for compensating victims of mis-selling, the Association of British Insurers detailed new moves that its members were making to tackle the problem.
Insurance companies that have sold private pensions now plan to speed up the task of identifying and compensating victims. They want government approval to lump together categories of victims of the pensions mis-selling scandal and deal with them as groups without seeking separate regulatory approval first.
But consumers dismissed the ABI's measures - which come nearly four years after research by industry regulators first revealed that more than 1.5 million people could have been wrongly advised to buy personal pensions in the late 1980s and early 90s - as too little too late.
"They are trying to shut the door after the horse has bolted," says Harriet Hall, financial researcher at the National Consumer Council. "Aggrieved consumers must be asking themselves why it has taken until now for the pensions and insurance industries to get together and deal with this as an industry problem."
Philip Telford at the Consumers' Association said: "They have spent a lot of money doing not very much, and now they are printing expensive reports and saying they are going to take action. It's a bit late in the day to have undergone a conversion on the road to Damascus."
The consumer response to the ABI report comes on the heels of a warning from Helen Liddell, the Economic Secretary, who said last week that she will shortly announce new sanctions against the worst performing pension providers unless they move more quickly to solve the problems of mis-selling.
"The statistics tell a grim tale but cannot give a true picture of just how much distress is caused," said Ms Liddell on Tuesday, flanked by two victims of mis-selling in order to highlight the human impact of the affair.
Figures released by the Government show that out of 41 pensions providers monitored by the Treasury, 11 firms have resolved fewer than 25 per cent of their priority cases, 25 firms have resolved between 25 per cent and 50 per cent and only five have resolved more than half.
Further pressure last week came from the pensions regulator, the Personal Investment Authority, which responded to the ABI report by accusing pension providers of spending time and effort finding reasons to eliminate people from the pensions review when they should be concentrating on helping those who have lost out.
The ABI insisted that the industry was making genuine progress in meeting regulatory deadlines. At the end of September 34.3 per cent of all priority cases had been settled, compared with 27.7 per cent at the end of August, it said.
The trade group also said it had been unable to act sooner because it could only respond to the wishes of its members. It said that it was only this year that the full extent of the problem had been realised at chief executive level.
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