Compensation payouts to members who have been wrongly advised to transfer out of DB schemes have doubled to £40m in two years, new data from the Financial Services Compensation Scheme (FSCS) has revealed.
Its figures, obtained by Nick Smith, MP for Blaenau Gwent and published by the Financial Times, showed that compensation increased from £20m in 2016, to £37.5m in 2017 before hitting £40m in 2018.
The report found that the increased payouts corresponded with a significant rise in the number of pension transfers in recent years, from £5.4bn in 2014 to £37bn in 2017.
Commenting on the data, Smith told the Financial Times: “The fact that the compensation paid out in these cases has doubled to £40m in just two years, between 2016 and 2018, is absolutely shocking.
"Many people - including some of my constituents - ended up losing thousands of pounds of hard-earned money because of the poor advice they were given."
The FSCS said that it was unable to provide specific figured on the number of companies or complaints surrounding the £40m of payouts because the information would have to be manually obtained and would exceed time and cost limitations.
FSCS chief executive, Mark Neale added: "We see many examples of mis-selling as both regulated, but also increasingly unregulated advisers, promote risky, illiquid investments.
"We see providers who fail to perform rudimentary due diligence on these investments."
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