The Financial Ombudsman Service has apparently just ruled in favour of a claimant against Prudential that believed they were wrongly advised to contract out of the State Earnings Related Pension Scheme.
According to the news we have received on this Ombudsman ruling, Prudential could not produce records to back up that the advice provided was suitable for the client at the time it was given.
Our View
This ruling will now urge many people to look at the advice they were given as regards contracting out. It will definitely increase the number of mis-selling claims as the UK's complaints culture gathers pace. What has come out of this case is that financial advisers must make adequate records and keep them for a much longer period than the industry regulator requires.
Whilst the Financial Services Authority expects some records to be retained indefinitely, many are destroyed after 3 or 6 years, leaving advisers with nothing to defend their advice.
Our view on this is to keep all records indefinitely.
Learn more about State Pensions and Contracting Out in the State Pensions Centre.