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FSAVC Pension mis-selling has meant that many people have lost out on long term income. The way that these policies have been handled has created such an issue that there is now a well established claims process for anyone who feels like they may have been affected by pension mis-selling in this way. If you have been a victim of mis-selling of an FSAVC pension then taking action now could help you to avoid permanent loss.

What is an FSAVC pension?

It’s very similar to a personal pension. The FSAVC requires that payments are made to an investment fund and what you get when you reach pensionable age will depend on how well the assets in the investment fund you’ve paid into have performed over time. This seems like it might be a good option for many people in principle but the FSAVC pension has some serious problems.

Mis-selling issues with the FSAVC pension

• High costs. Many FSAVC policies have been sold with very high costs attached, which you may either not have been made aware of or simply not realised that these were disproportionate. These costs are generated in order to cover the commission that is charged by those who are selling FSAVC pensions. They can also be used to cover the administration, as well as to generate a profit for insurers.
• Disappointing investment performance. An FSAVC pension will pay out in an amount that is dependent on the performance of the assets in the investment fund. In many cases this performance has been very poor and so payouts generated would be very low. Many people who have bought into this type of policy may not have been aware of the potential for loss in this way. Many of the investment funds are considered high risk and it’s essential for an advisor to ensure that anyone putting their money into this type of investment has the right risk appetite – where that’s not the case, or the advisor didn’t check, mis-selling may have occurred.
• A lack of information about alternative options. For many people the best financial option would have simply been to make payments into an employer’s pension scheme, not to put it into an FSAVC policy. There are a number of advantages to doing this, including that the cost tends to be much lower so there is more money available to build up your pension. Some pensions also offer the option to buy up additional years of service (e.g. those in the public sector) – this a way of increasing pension funds that is not dependent on investment performance and so can result in a bigger pension pot.

The sale of an FSAVC pension is a process that should be carefully handled to ensure that the person buying the policy is suited to it – and aware of the risks involved as well as all the other options that are available. Unfortunately, this hasn’t happened for many people who have invested in their future via an FSAVC pension. If you’ve been a victim of mis-selling then you could make a claim that could help put you back into the position you would have been in had the mis-selling never occurred.