Well-informed consumers will demand higher standards from those servicing them
Empowering consumers, be they employees or those outside the workplace, seems to be at the top of many organisations’ wish lists right now. This laudable aim cannot fail to improve the outcomes achieved by people in this country. How often has ignorance of the options open to people seen them miss out on good deals thatcould have had a genuinely positive effect on their day to day lives.
How often has ignorance of the options open to people seen them miss out on good deals that could have had a genuinely positive effect on their day to day lives
As financial services professionals we all see on an almost daily basis cases of fellow employees or friends making ill-informed decisions that we know will end up costing them dear. In many cases we gently attempt to put them on the right track, but doing so in a way that carefully makes sure what we have said cannot be considered as advice.
The need for this increased awareness is unarguable at a time when an ever increasing level of responsibility for financial matters is placed on the individual.
But providers, advisers and Government agencies must also prepare themselves for a more combative approach from consumers in future. As individuals are being told they must look after number one, so they will be increasingly likely to challenge those who let them down.
One area where this new attitude could come to haunt the industry is in the at-retirement space. How many trustees are still not making sure scheme members are directed towards impaired life annuity providers if they have conditions that merit an enhanced income? With up to 40 per cent of individuals believed to be entitled to an uplift of some sort, the numbers of those with potential claims against trustees and/or their advisers could be considerable. And while grounds for compensation would be very different, there is similar risk for those involved in the supply of annuities in the contract-based arena.
One successful case taken through either the Pensions Ombudsman or the Financial Ombudsman Service could set a precedent that would kick off a flood of claims. Given that the recent TPR report into pre-retirement literature of DC schemes found 30 per cent of those who responded had ‘alleged legislative breaches of retirement disclosure regulations’, the chances of succeeding on a maladministration claim cannot be remote. And the true number of trustees falling short of their legal requirements could be even greater. I would expect those who responded to TPR’s survey to be amongst the better organised ones.
Few would deny we are playing catch-up in all areas affected by the switch from the paternalistic approach of defined benefit to the chill wind of defined contribution. But it seems clear those dealing in workplace pensions have spent more time focusing on designing the accumulation phase of the process than decumulation. The time has come to redress the balance.
John Greenwood, Editor