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FCA Highlights The Pitfalls Of “Free” Pension Advice


In its latest update, the FCA (Financial Conduct Authority) has issued a fresh warning about the risks involved in accepting ‘free’ pension advice.

The regulatory body urges consumers to take care if they are offered free pension advice, as such schemes could pose exceptional risks or be linked to scams. The alert asks consumers to think carefully before transferring their pension to a new scheme if they have been persuaded to do so following an unsolicited phone call, online advert or text message.

The FCA lists the types of pension schemes usually targeted by free pension reviews and advises consumers to consider seeking professional advice if they are encouraged to transfer their pension savings to a self-invested personal pension (SIPP), a small self-administered scheme (SSAS) or a qualifying recognised overseas pension scheme (QROPS). It also alerts consumers to question whether the proposed pension will be invested in unusual investments, such as overseas property, forestry, storage units, care homes and bio fuels.

According to the FCA, “Professional pension advice is not free.” It clearly highlights the risks associated with free pension reviews; “Some of these investments are badly run, while others may be outright scams.” It went on to say, “Many companies making these offers are not authorised or regulated by the FCA. …For most individual investors, investing their pension savings in unregulated investments are unlikely to be in their best interests.”

If the pension scheme is arranged by an unregulated company or adviser, the consumer loses the right to complain to the Financial Ombudsman Service and they will not be able to claim compensation should the worst happen. The message from the FCA was clear, “You could lose some or all of your pension pot.”

If you have been approached for a free pension review, it is essential you seek alternative advice from a regulated financial service provider. All authorised advisers are registered on the Financial Services Register.

D&G Independent Limited is authorised and regulated by the FCA, and has the correct permissions from the regulatory body to provide advice on all aspects of pensions, including Occupational Pension Transfers and Pension Opt Outs. If you would like more advice about this alert or wish to review your current pension arrangements, we can offer professional, impartial advice. Please call 01352 754272 or email to arrange a consultation.

To read the full alert from the FCA, please click here and you will be taken directly to the article published to the FCA’s website.


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