Since the financial crash of 2008, many banks have had to face group claims based on mis-sold financial products.
Until recently, the pension industry hasn’t been hounded for mis-selling despite selling as much financial products as the banks.
The reason why they’ve managed to elude so many claims is due to the fact that they’re harder to target for mis-selling claims. The way the pension investment journey is structured has a lot to do with how difficult it is to target them.
Banks keep each part of the investment journey in-house. This means that bank employees are meant to advise customers to buy financial products sold by their bank. This, in turn, made it easier to target the bank when things went awry. The pension investment journey does not have this easy path. It is much more complex which makes it more difficult to hold anyone accountable.
Pension Investment
Standard pension investment journeys involve a few people, working in different jurisdictions with different local regulatory laws applying to them. These can include:
- An independent financial adviser
- A pension trustee
- A financial institution offering an investment product
- An investment fund selling investments.
In order to obtain referrals, these four tend to rely heavily on each other. In fact thousands it isn’t uncommon for thousands of investors to follow the same investment journey through the same four entities.
Because of how much they rely on each other, they may not want to hold each other accountable when mistakes occur.
If there are any pension losses, the pension investors will have a tough time trying to get any compensation through civil courts. In order to get any recompense, the pension investors will have to figure out the investment journey, identify the responsibilities of each player according to the relevant laws, and prove the guilt of any potential defendants.
Even just trying to figure out the mental part of trying to get recompense would be difficult. It would require specialist legal knowledge that many people just don’t have. There’s also the financial difficulty of committing to civil proceedings and the risk that the claimant would have to pay the defendant’s cost should they lose.
There is no wonder then, as to why so many choose to let their potentially mis-sold claims be.
Pension Litigation Could Be Huge
Yes, despite all those difficulties pension litigation could become huge. This is mostly due to two things: increased access to third-party litigation funding and the increasing sophistication and skill of lawyers pursuing these claims.
The way pension litigation works is as follows:
- A third party pays the legal costs of going to court.
- If the claim is unsuccessful the third party loses their investment.
- If the claim is successful, the funder is repaid its costs and a premium.
While the pension investment journey may seem complicated, it’s important to realize that thousands of people end up buying the same pension investment, with the same terms, from the same entity. This means that if there is a fault somewhere in the journey, all these pension investors will have the same claim against the same defendant. With the above third-party litigation, they will all be able to afford to go to court.
Conclusion
Pension litigation could become a boom sector. With the new developments in pension litigation it will be much easier for pension investors to go to court and try to get recompense. Plus, should there be any mistakes made by anyone in the pension investment journey, there will be a lot of claimants. Hopefully, everyone gets justice for mis-sold goods.
Did you get mis-sold products? Contact Consumer Reclaim today! We specialise in consumer mis-selling of goods, services, and insurance.