In the latest annual report produced by his office, Channel Islands Financial Ombudsman Douglas Melville said he was expecting to see more complaints relating to those areas arise in the coming months and years.
Mr Melville said that, like in the UK, a rising number of people were looking to cash in their pensions as a lump-sum, or transfer to plans that promise higher returns, as schemes have struggled to yield money due to low interest rates.
He advised anyone considering doing this to seek professional advice first, as poor financial planning or decision-making can lead to hardship in old age.
‘A lump-sum may seem like a lot of money at the time, but when you consider the costs of later life, such as health care and living costs, it may not be enough,’ he said.
‘And when it comes to transferring to another plan, you have to consider whose interest this is in. Is it in the interests of the person who holds the plan? Or is it the interest of investment managers, or any number of other people involved with the transaction?
‘We have had cases where the trustees of pension plans have refused to release funds because they viewed it as not in the interest of the client to do so, and they were right to do so.
‘I would advise anyone who is considering a pension transfer to get advice from a professional and regulated individual before doing so.
‘They should also be cautious about transferring to any off-Island products, because they will lose their legal protection if they do.’
Mr Melville also said that he expected to see more complaints arising relating to Islanders being mis-sold complex investments which they do not understand.
‘When it comes to making investments, our message is simple: If you don’t understand it, don’t invest in it,’ he said.
‘And there are a lot of things like structured products, derivatives and leveraged products which are being sold to investors who don’t understand what they are.
‘It is fine if you are a sophisticated investor, or if those investments are a small part of a much larger portfolio.
‘But we have been getting cases where people have invested a large portion of their portfolio in complex products – they don’t know what they are – and have lost money.’
Mr Melville’s office was established in 2015 and has the ability to investigate complaints concerning banking, lending, money services, insurance, pensions and investment services. It can order firms to pay settlements and compensation.
According to its annual report, the office had an increase of 21% in case files last year and has taken on a fourth case handler to help deal with the workload.
The office can be contracted on 748610, or at enquiries@ci-fo.org.
News Focus: Monday’s JEP.
