Prudence fails to talk on mis-sold pensions

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The Independent Online
Hundreds of thousands of people who were mis-sold a personal pension have still not been offered any compensation for their losses, almost a year after a deadline was set for insurance companies to deal with the scandal.

Miners, nurses and teachers are among those still waiting for companies that wrongly advised them to leave their occupational pension schemes to deal with their claims.

Confidential documents obtained by The Independent show that 26 companies, including many household names, made up almost three-quarters of the 563,000 "priority cases" still under review.

The 26 companies, which include the Prudential, have identified more than 360,000 priority cases where the advice is thought to have been highly damaging or where a person is either close to retirement or dead. Redress has been offered to only 500 people.

The documents were compiled by the Personal Investment Authority (PIA), the watchdog in charge of the compensation process, for its board meeting earlier this month. The information was deemed so sensitive that board members were told to return their copies afterwards.

The board also discussed a separate report by its chief executive, Colette Bowe, in which she raised the possibility of setting new deadlines. But she warned that given past failures, a new deadline might simply "provoke cynicism and downright disbelief".

Publication of this information could be highly damaging to the PIA, which has staked its reputation on being able to deal swiftly with the problem. It originally set a deadline of December 1995 for urgent cases to be dealt with.

According to the PIA's report, the worst offender is the Pru, which has offered compensation to only 10 people, despite filing returns showing it has more than 41,000 priority cases.

The Co-operative Insurance Society, Pearl Assurance, TSB and Legal & General are also in the top five. Those companies' salesmen were accused by miners' leaders of scouring pit villages to persuade mineworkers to pull out of superior occupational schemes in the late-1980s.

By contrast, independent financial advisers, who have sold more than 40 per cent of personal pensions, contribute 15 per cent of mis-selling cases.

The secret PIA report comes as the annual report by the authority's consumer panel yesterday said progress of the pension review has been "painfully slow".

"We have warned of the implications for future consumer confidence," the consumer report said. "Distrust will discourage people from making provision for the future at a time when doing so has never been more important."

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