FSA announces progress and updated redress costs of the pensions review
01/12/2000
The overall cost of the pensions review is now estimated to be 13.5 billion. The revised redress payable to consumers under phase 2 of the pensions review is estimated to be around 7.5 billion. The estimated redress payable for the priority review remains unchanged at 4 billion. Total potential administration costs are estimated at around 2 billion.
The current increase reflects the change in financial conditions since early 1998 and the better information that is now available on the cases being reviewed under phase 2. Previous phase 2 estimates in March 1998 showed a redress bill of between 3.4 billion to 5.8 billion.
Firms have now largely completed the identification process of phase 2 cases due for review and over one third of consumers with a reviewable case have been notified of the outcome of their review. The phase 2 figures based on the industrys September 2000 returns are as follows:
| Number requesting review: | 1,194,000 |
| Number found to have reviewable cases | 872,000 |
| Reviews completed to date (offers made/no redress due) (35% of reviewable cases) |
301,000 |
| Offers accepted: number | 199,000 |
| Offers accepted: amount | 1.7bn |
Notes for editors
- The personal pensions mis-selling review is aimed at people wrongly sold personal pensions between 29 April 1988 and 30 June 1994. Mis-selling occurred when people who would have been financially better off at retirement in their employers pension scheme were advised to leave or not to join their employers scheme, or where they transferred pension benefits from a previous employers scheme and took out a personal pension plan instead.
- The priority phase of the review of mis-sold pensions involved older consumers at or near retirement. Phase 2 extends the review to younger consumers, typically in their 30s and 40s.
- Reviewing Firms should complete all of their phase 2 cases by 30 June 2002. By this date, all phase 2 consumers should have received either an offer of redress or a letter explaining that redress is not due.
- Details of progress of phase 2 of the Pensions Review(based on September 2000 returns):
Total Product Providers Networks and Large IFAs Small IFAs Requests for Review 1,193,978 1,042,640 96,470 54,868 Cases for Review (a) 871,986 772,883 54,444 44,659 Assessments complete (offers made plus cases where no redress due) 301,093 264,085 23,590 13,418 As a % of (a) 34.53% 34.17% 43.33% 30.05% Offers made 243,680 219,431 19,284 4,965 Offers accepted 199,074 178,515 16,286 4,273 Amount of redress Accepted 1,679m 1,481m 159m 39m - Of the 717,000 investors who were identified under the priority phase of the review more than 98% have been informed of the outcome of their review. Almost 3.6 billion in redress has been accepted by 406,000 investors.