Alarm bells ring over 'pension liberators'

During more than 25 years of reporting on personal finance (how time flies), I can't ever remember a time when the financial world was scandal free. Sadly, it's a fact of financial life. Where there's money involved, crime is never far away. And if not crime, then mis-selling.

I've witnessed it all in my time - from personal pension and endowment mis-selling in the 1980s, equity release scams in the 1990s and then in the Millennium everything from precipice bonds through to payment protection insurance.

Come rain or shine, come change of financial regulator, economic recession or steady recovery, the mis-selling of financial products carries on regardless. In fact, I don't think it can ever go away while so many financial companies continue to place so much emphasis on selling products.


One of the reasons I believe the situation won't change is because in recent months I have been contacted by a number of Lloyds Banking Group employees complaining about the pressure they are being put under to sell a range of products - from loans to insurance and credit cards – irrespective of whether the customer needs them or not. Behaviour representing the hallmarks of yet another potential mis-selling scandal.

One branch employee at Halifax alleged that a culture of 'sell at any cost' was now prevalent, which was resulting in potentially 'ongoing' mis-selling. She went on to detail the level of pressure applied on counter staff and bank advisers (banking, mortgage and financial) to ensure product sales.

Counter staff, she alleged, must ask 80% of customers whether they would like to make an appointment to discuss their financial needs. Asking, however, is not sufficient as a quarter of these customers must then be persuaded to commit to an appointment and from these appointments 10% must result in a sale. Banking advisers are expected on a weekly basis to make a minimum of 15 cold calls, see 25 customers and fulfil 30 'needs met' (jargon for 30 sales).

Similar complaints have been made by advisers working at Lloyds branches while the bank's staff union, Lloyds Trade Union, has been quoted as saying high sales targets are resulting in "the wrong kinds of behaviour", which can only lead "to the detriment of customers".

Although Lloyds insists all its "processes are focused on achieving correct outcomes, helping to make customers better off and providing excellent service", I don't think we have heard the last on this issue (my colleagues on the Daily Mail and the thisismoney website have reported independently similar allegations made by disgruntled staff).

Apart from the ongoing propensity of the big banks to mis-sell, there is now a new issue causing alarm bells to ring in my ears every day: the one surrounding pensions' liberalisation.

Greater control

From next April, as a result of measures announced in this year's Budget, many people will have far greater control over how and when they can access their pension funds. Rather than being forced into buying a lifetime annuity, they will be able to withdraw income from their pension fund as and when they need it. Indeed, as Pensions Minister Steve Webb has already said, pensioners will be able to blow their pension funds on on a Lamborghini if they want.

All great news – and I have been more vocal than most in my support of this new relaxed pensions regime. Yet the impending freedoms are already attracting scamsters. These 'pension liberators' are claiming they can unlock your pension pot immediately – before the official April 2015 start date. Furthermore, they say it can be accessed before the age of 55 – the official age from which you can start turning pension funds into pension income.

Anyone falling for the sales patter will pay a high price in advice fees, possibly in the region of 30% of your pension pot, as well as suffering an 'unauthorised withdrawal' charge of at least 55% imposed by HM Revenue & Customs.

So forget the fact that the big banks have all promised to clean up their act and become customer-loving. Put aside how reassured you feel that we now have in place a new tough regulator – the Financial Conduct Authority. And remember the age old adage at all times. Caveat emptor. Buyer beware.

Jeff Prestridge is the personal finance editor of the Mail on Sunday. Email him at

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