redress for pension mis-sale cases that fall outside the Pensions Review
(with assumptions as at 1 July 2008)
This briefing explains how — since 1 October 2005 — we have dealt with redress for complaints about pension sales that do not fall in the period covered by the industry-wide Pensions Review. We take a different approach for these complaints because they are not a “closed” group relating to a specific fixed period, as Pensions Review cases are. Any remaining Pensions Review cases should continue to be handled for purposes of redress in line with the review methodology and assumptions fixed by the FSA.
background
For the Pensions Review, the regulators, the PIA and subsequently the FSA, laid down a methodology and assumptions (for example, the discount rate to be used to value future benefits) which the regulator then revised from time to time – for the last time in April 2003.
But the Pensions Review has now effectively drawn to a close. And the FSA’s Pensions Review Bulletin 27 announced that – unless exceptional circumstances arose – it would not be updating those assumptions last revised in April 2003. It said that firms should continue using those assumptions for Pensions Review cases, regardless of the future date of settlement.
This raised the issue of what approach firms and the ombudsman service should take for similar pension cases falling outside the boundaries of the Pensions Review.
"wider implications"?
We adopted our “wider implications” process to look at this issue. The steps that we took in liaison with the FSA are explained on the special joint website that covers “wider implications” matters.
The outcome of this process was that we commissioned PricewaterhouseCoopers (who advised the FSA on appropriate assumptions for the Pensions Review) to report to us on assumptions that should be used for future pension mis-sale cases that fall outside the Pensions Review.
most recent review of assumptions: 1 July 2008
PricewaterhouseCoopers has reviewed the assumptions that should be used for future pension mis-sale cases that fall outside the Pensions Review. Its report recommends the following assumptions from 1 July 2008 [PDF version opens in new window]. These assumptions apply for calculations of:
(a) prospective loss, and
(b) redress.
validity
All calculations done in the period from 1 July 2008.
"as at" date
All calculations of prospective loss and redress for prospective loss carried out in this period, and the value of all personal pensions, should be carried out as at 1 July 2008.
earlier reviews of assumptions
PricewaterhouseCoopers previously reviewed these assumptions on the following dates: