Advisers have been warned to be extra vigilant when recommending income drawdown contracts as an alternative to a pension annuity, with a leading actuary predicting a wave of mis-selling claims.
Some claims have already been seen for income drawdown mis-selling and the actuary anticipated there would be more in the wake of 12 months of stock market turbulence.
And, clients are winning. Example: a financial director of a very large company said that he had no working knowledge of investing when he was in the witness box in front of a judge!
Advisers therefore need to should watch out for ambulance chasers and those looking to make a quick buck from opportunistic claims. Advisers need to create an audit trail for every recommendation highlighting alternative retirement options, including pension annuities, and why they had been discounted.
Advisers need to watch for certain things: failure to do a full fact find, the omission of proper transfer analysis, misreading a client’s attitude towards risk and a failure to cover alternative options, such as pension annuities.
As a client, take specialist advice and know what you are getting into to avoid problems in the future.