It’s been reported this month that some of the top insurers have gone against the advice of the financial ombudsman and have provided consumers with highly reduced compensation — leaving many pensioners hundreds of pounds worse off. This case brings forward the matter of solicitors and will writing professionals having to thoroughly analyse clients’ financial status and ensure they are planning for their future effectively.
Insurance providers are said to routinely check savings policies for miscalculations on a regular basis, but only a small percentage of funds are scanned during the process. Whenever mistakes are found, insurers have to pay out in order for consumers to recover their losses.
It’s recently come to light however, that some of the top insurance firms have been administering miscalculated compensation amounts to consumers, following errors in pension savings. This could have been the case for decades and concerns are raised as to how this could have affected many thousands of pensioners — some of whom may be your will writing and probate clients.
When such errors occur with pension funds, chief legal advisers and the financial ombudsman state consumers are expected to receive the full amount of losses. In addition they are to be given 8% annual interest for each year in which the losses were incurred.
That said, in many instances within this case, the insurance providers seemingly went against this recommendation and applied reduced interest rates — some of which being less than 1%.
Does this have a key role to play in the financial struggle many pensioners have experienced in recent years, or is this case just a regular, unavoidable error that regularly occurs within the pension industry?
The underpayments are reportedly due to system and human errors, and some of the insurance firms have claimed to be unaware of the 8% interest rate recommendation.
Solicitors and other wills and probate professionals should be aware of this issue and are advised to ensure their clients don’t fall victim to losses. If as a result consumers are hundreds of pounds worse off than expected, this could have a detrimental effect on financial situations and overall calculations when probate is administered.
What are your thoughts on this case? Please share your comments below.
