The FSA announces June 2002 target date for completion of Phase 2 of pensions review

The current phase 2 population for review is 1.03 million. Consumers who have not yet requested a review but wish to do so should return a form to their pension company no later than Friday 31 March 2000.

Both the target date and the final date for investors to sign up for a review are issued as guidance to the front line regulators.

Ron Devlin, Director, Pensions Review said:

"The phase 2 population now for review is around 50% larger than the priority review. Those who have requested reviews have done so because they are concerned that they could have lost out. It is important that their concerns are addressed quickly and that compensation is given where due. The aim for every firm should be to get the job done, and done properly, in the shortest feasible time. We expect this target to be met by all and bettered by many. The regulators will be monitoring progress closely."

Target date

Reviewing firms should complete all of their phase 2 case assessments by 30 June 2002. By this date, all phase 2 investors should have received either an offer of redress or a letter explaining that redress is not due.

Firms progress towards this target will be closely monitored. Firms with small reviews are expected to complete substantially faster than those with the largest reviews.

Review scale

Firms responsible for phase 2 reviews report that the current phase 2 population is 1.03 million. The population is split equally between transfers and opt outs / non-joiners.

Sign-up date for investors

Investors that wish to have their personal pension sale reviewed must request a review no later than Friday 31 March 2000.

After this date, investors will be able to exercise such rights as remain open to them - through making a formal complaint (including, if necessary, taking the matter to the Ombudsman) or, if they wish, by taking legal action.

Notes for editors

The FSA stated last August (in the phase 2 policy document) its intention to publish a target date or date(s) for phase 2. In response to consultation on phase 2 policy (CP7), it said that targets would be set on the basis of offers made rather than accepted; that the same date(s) would be set for all firms; and that those date(s) would be realistic but challenging. The date has been set following a review of project timelines submitted by reviewing firms.

The sign-up date and target date announced by the FSA have already been adopted by PIA, SFA and IMRO. The FSA will publish full guidance on target dates (definitions etc) later in August. In the meantime, further detail is provided in the 5th edition of the FSA Pension Review Bulletin published today.

The phase 2 review population compares with a priority review population of 690,000. To date, 384,000 of these investors have accepted offers of redress. Redress offered (excluding the value of unconditional offers of reinstatement and benefit guarantees) amounts to 2.6 billion.

Firms phase 2 population arises from three sources. The majority of cases are requests for review received in response to the direct invitation mailing (or factsheet in the case of some rebate-only investors) sent out between January and April. In addition, all firms are required proactively to review the cases of any investors that died or retired before 30 June 1999 (or 31 July 1999 in the case of rebate only cases). Finally, some firms are reviewing some or all phase 2 cases on a proactive basis.

The FSAs estimate of the total number of potentially reviewable phase 2 cases is 2,076,000. Research published in May set out the FSAs findings on why some investors chose not to reply. Many had made an informed decision (positively choosing not to respond). Less than a quarter of non-responders had not found time to read the materials.

Firms mailings between January and April were accompanied by a high profile media campaign run by the FSA. A full account of this campaign (its development and outcome) will be published later in August.

The FSA stated last August (in the phase 2 policy document) its intention to specify during 1999 a final sign-up date for investors. Until this date, firms are required by regulatory guidance to review cases simply in response to a request from an investor.

Investors who do want to sign up before 31 March 2000 should do the following:

those that received a phase 2 mailing in the distinctive R U Owed? envelope (or, in the case of the younger rebate-only investors, a factsheet) should read the materials sent to them and decide whether they should request a review if so, the materials will tell them what to do;

any investor who did not receive such a mailing, or who has mislaid the materials, can write to their pension company asking for an information pack to help them decide what to do.

The FSA will actively publicise the sign-up date early next year through press advertising and public relations activity.

Once the sign-up date has passed, investors will only be able to pursue a pension review case where a review has not previously been requested by using either the standard complaints process (including the Ombudsman) or the Courts. These mechanisms require the investor to specify the cause of complaint and provide evidence to support it. This is in contrast to the pension review procedure which allows investors to request a review of their case by completing a straightforward form and supplying a small amount of information that the firm needs to assess the position.

Firms will only be able to apply the sign-up date if they have complied with the regulatory guidance particularly in respect of the specification and timetable for issuance of direct invitation materials.