'Stop passing the buck'
Thousands of teachers have sought compensation after being mis-sold pension top-ups, but some are now facing a lengthy battle for redress. Lynne McCool, a secondary teacher from Newport, south Wales, has struggled for 18 months to win a review of her free standing additional voluntary contributions (FSAVC) scheme.
Since March 2002, when a TES article alerted Mrs McCool that she might be a victim of mis-selling, she has made dozens of phone calls and written many letters to the Financial Services Authority, the financial ombudsman and the company concerned - but to no avail.
"I cannot believe how I've been fobbed off," said Mrs McCool. "I have a mound of paperwork and nothing to show for it. The whole area is a minefield for a lay-person and it's really only my anger that has kept me going."
Mrs McCool is one of thousands of teachers who applied for compensation.
Teachers whose claims are successful win an average of pound;2,300, says Paul Skillicorn, pensions review officer for council employees in Gwent, which covers Newport. So far, he says, the compensation bill for teachers and other council employees in his authority is about pound;1 million. The reason is that free-standing AVCs inevitably show a shortfall when compared with the teachers' and local government schemes.
The Prudential, the company that provides in-house AVCs to the teachers'
pension scheme, says that at the height of the furore over mis-selling two years ago it was dealing with hundreds of requests for reviews every month.
The firm is now looking at about 50 new cases monthly.
Actuaries Bacon and Woodrow calculate that the worst-performing in-house AVC will still produce better results than the average free-standing version. Mr Skillicorn says independent financial advisers are often unsure how to deal with free-standing AVC reviews.
"If it's a small firm, it may not have the resources to deal with investigations of mis-selling," he said. " It may also be worried about paying for indemnity insurance, as premiums will increase in line with the number of complaints made against it."
Mrs McCool's problems started when a financial adviser working for SA Cutler, a Newport firm, sold her a Scottish Widows FSAVC scheme in 1991.
She says he did not tell her that charges for FSAVCs were higher than for the teachers' in-house scheme - because of hefty commission paid to insurance firms and financial advisers. She also claims he failed to mention the in-house scheme and the "past-added years" option, a chance to buy extra years of service to boost a pensions. Such omissions, if proved, could be deemed as mis-selling.
Mrs McCool contacted the FSA for advice and wrote to SA Cutler requesting a review. But three months and many phone calls later, she was told that her adviser had retired.
Six months later (September 2002), Mrs McCool was finally told that Countrywide Independent Advisers, SA Cutler's parent organisation, would deal with her case. But Countrywide then said SA Cutler was not affiliated to it when Mrs McCool bought her policy.
When she contacted SA Cutler again, she was told the firm needed details from Teachers' Pensions in Darlington before it could proceed with a review. But Teachers' Pensions was puzzled to hear from SA Cutler because the only top-up information it has relates to past-added years, a diversion which dragged out the saga for another month or so.
Finally, at her wits' end, in June 2003 Mrs McCool complained to the financial ombudsman, who passed on her papers back to Countrywide. The authority told Mrs McCool that it could not help her as SA Cutler had not been registered with it when she was sold her pension top-up.
A month later, Mrs McCool finally heard that Countrywide, now renamed Sesame, was conducting a review.
A spokesman for SA Cutler blamed the delays on the lack of information and support that the firm received. "We were left to blunder along on our own as Countrywide at first refused to take responsibility," he said. "I can't pretend we dealt with it as quickly as we should have done, but it is the first experience we've had of carrying out a review."
A spokesman for Sesame commented: "Our responsibility relates to the additional payments made into the policy, but not the original sale. We are keen to resolve this matter as quickly as possible once we have received the necessary information from Mrs McCool's financial adviser. We will then be able to establish whether any mis-selling has taken place."
MIS-SELLING: WHAT YOU CAN DO
* Write to the company concerned, requesting a review.
* To gain compensation, the review must show that you were given the wrong advice - in other words, you were not told about the different charges made by FSAVCs and in-house AVCs.
* The review must also show that you stand to lose financially because you were wrongly advised.
* Advice is available from the FSA consumer helpline: tel 0845 6061234