Pension victims in line for early compensation

Financial advisers and insurance companies will be ordered today to compensate up to 350,00 victims of the pensions scandal by the end of this year.

They are among the 1.5m people who may have been wrongly advised to take out a personal pension rather than remaining with, or joining, occupational pension schemes.

New rules on compensation will be published today by the Personal Investment Authority - the financial services watchdog body.

The rules, which have been seen by the Independent, say that a substantial majority of urgent cases, some 350,000 in all, must be dealt with by the end of this year.

Priority will be given to cases where the holders of personal pensions have retired or are dead. Next in line will be policyholders who are close to retirement. The remainder of priority cases are to be settled by the end of 1996.

The PIA, under its chief executive Colette Bowe, has acted following a report last November by the Securities and Investments Board, the City regulator. This showed that up to 1.5m people may have been wrongly advised, and the compensation bill may reach £3bn.

About 1m people are being treated as priorities - including those, known as opt-outs, who were urged to leave their company pension schemes, set up private ones and transfer any savings into them.

Also covered in the review are employees who had the option of joining a company scheme but were sold a private pension instead. They are known as `non-joiners'.

The PIA is proposing to leave until last a further 600,000 cases - policyholders who switched jobs, started a private pension and shifted money from their old fund into it. The authority has yet to publish guidelines on how their cases will be assessed and compensated.

For opt-outs and non-joiners, it recommends that all reasonable steps be taken to contact any policyholders affected. This includes asking the Department of Social Security to forward letters to former clients.

Advisers should also consider offering compensation for distress to clients who they feel deserve it.

"It is in the interests of firms to give consideration to this aspect to avoid investors unnecessarily taking a claim to the [PIA] Ombudsman," the PIA says.

Unless totally necessary, the adviser or company representative carrying out a face-to-face review of the pension should not be the one who sold it. Nor should the meeting be used to sell further financial products, unless requested by the client.

But the PIA may still face legal action by the IFA association, the financial advisers' trade body, which claims many of its members will be forced out of business if they implement the new rules.

The association has successfully delayed the introduction of similar rules from the SIB by applying for a judicial review.

Garry Heath, chief executive of the association, said: "We had a meeting with the PIA last week at which we believed its officers were prepared to come round to our point of view on some issues. It now appears this is not the case. We will have to decide whether we seek a judicial review of the PIA guidelines."

It is believed that some of the association's directors are dismayed by the hostile public reaction to the legal action against the SIB rules and have threatened resignation if it is extended to the PIA.

The investment authority's new rules on compensation were originally due to be published before Easter, and the delay was partly caused by claims that they were too difficult to understand.

PIA staff have spent much of the Bank Holiday writing an easy-to-read guide for their members.

Arts & Entertainment
The Honesty Policy is a group of anonymous Muslims who believe that the community needs a space to express itself without shame or judgement
music
News
Waitrose will be bringing in more manned tills
newsOverheard in Waitrose: documenting the chatter in 'Britain's poshest supermarket'
Arts & Entertainment
tvIt might all be getting a bit much, but this is still the some of the finest TV ever made, says Grace Dent
Life & Style
life
VIDEO
News
Who makes you happy?
happy listSend your nominations now for the Independent on Sunday Happy List
Arts & Entertainment
Ian Anderson, the leader of British rock band Jethro Tull, (right) and British guitar player Martin Barre (left) perform on stage
musicJethro Tull frontman leads ‘prog rock’ revival
Arts & Entertainment
Back in the suit: There are only so many variations you can spin on the lives or adventures of Peter Parker
filmReview: Almost every sequence and set-up in The Amazing Spider-Man 2 seems familiar from some earlier superhero film
Life & Style
Father and son: Michael Williams with son Edmund
lifeAs his son’s bar mitzvah approaches, CofE-raised Michael Williams describes the unexpected joys he’s experienced in learning about his family’s other faith
Sport
Gareth Bale dribbled from inside his own half and finished calmly late in the final to hand Real a 2-1 win at the Mestalla in Valencia
sport
Arts & Entertainment
Who laughs lass: Jenny Collier on stage
comedy... writes Jenny Collier, the comedian whose recent show was cancelled because there were 'too many women' on the bill
News
House proud: keeping up with the Joneses now extends to children's playhouses
newsLuxury playhouses now on the market for as much as £800
News
news
Life & Style
Stir it up: the writer gets a lichen masterclass from executive chef Vivek Singh of the Cinnamon restaurants
food + drinkLichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines
Extras
indybest
Arts & Entertainment
Ken Loach (left) and Mike Leigh who will be going head to head for one of cinema's most coveted prizes at this year's Cannes Film Festival
filmKen Loach and Mike Leigh to fight it out for the Palme d'Or
News
The academic, Annamaria Testa, has set out on her website a list of 300 English words that she says Italians ought to stop using
newsAcademic speaks out against 'Italianglo' - the use of English words in Italian language
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit