MPs to grill PIA over delays

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The Independent Online
The Personal Investment Authority will come under scathing parliamentary attack tomorrow over its handling of the pensions "mis-selling" scandal, heightening the controversy over the Government's decision last week to privatise pensions completely.

MPs on the Treasury and Civil Service Select Committee intend to roast the City watchdog over delays in compensation to people given bad advice in the drive towards private pensions from 1986 onwards.

The PIA chairman, Joe Palmer, and chief executive, Colette Bowe, will also be grilled over the decision to award Ms Bowe a pounds 20,000 bonus last year, on top of her pounds 161,000 salary, when the mis-selling review is so badly off course.

So far, two years after it started, only pounds 61m has been awarded to 6,810 people out of a total 558,370 cases identified for review.

The total cost of the scandal - in which nurses, teachers, miners and others were persuaded to opt out of better occupational schemes - is estimated at around pounds 3bn.

"The Committee will be in a pretty aggressive mood. Here are these people coming along with this incompetent situation and awarding bonuses," said Brian Sedgemore, a Labour member of the committee.

Two years ago, the body called on Mr Palmer to resign, as he had been chief executive of Legal & General, one of the worst offenders alongside the Prudential and Pearl Assurance.

Observers say the big insurers may be among the losers in a changeover to privatised pensions. Peter Tomkins, a pensions expert at accountants Price Waterhouse, believes the winners will be those who can "provide simple regulated products at low cost: the Virgins, Fidelitys and Marks & Spencers of this world."

"It could be very bad news for the big players in the insurance industry," he warned.

The Pru, Britain's biggest provider of personal pensions, with 1 million customers, was reluctant to comment. A spokes- man said that pensions law had needed change for some time, and that the company looked forward to the consultation process.

Regulation will play a key part, however, and there is a general belief that, among the criteria any government will adopt, cost will feature prominently.

Tony Wood, at Virgin Direct, said this would be good for the industry as a whole "as it would force it to get its house in order".

The pensions mis-selling scandal has already hit the industry hard and the Pru's recent move to lift the commissions it pays to independent financial advisers, he added, showed exactly what the big insurers believed helped sales.

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