8 Warning Signs of a Mis-Sold Pension: Protect Your Retirement

With extensive experience in pension mis-selling claims, we’ll explain what to watch for and how to protect your retirement savings. If something feels off, this article will help you understand your rights and next steps.

A properly managed pension should be diversified across different asset classes, reducing the risk of a complete loss. However, some Self-Invested Personal Pensions (SIPPs) have suffered catastrophic losses due to mis-sold, high-risk, or unregulated investments.

Warning Signs of High-Risk Pension Investments:

What You Should Do: If you’ve experienced a significant pension loss, seek immediate legal advice to explore your compensation options.

Excessive fees or hidden charges can drastically reduce your pension savings over time. Many mis-sold pension investments were driven by high commissions paid to introducers and advisers—often at your expense.

Common Fee-Related Mis-Selling Practices:

What You Should Do: Review your pension statements and documents. If fees were not disclosed or seem excessive, you may have grounds for a compensation claim.

If a financial adviser or agent contacts you out of the blue, this is a major red flag. Many mis-sold pension cases start with cold calls, unsolicited emails, or online ads promising better returns, free pension reviews, or investment opportunities.

Common Cold-Calling Tactics:

Since January 2019, pension cold-calling has been banned in the UK. If you were the object of cold-calling or an unsolicited approach, your pension transfer may have been mis-sold.

What You Should Do: If an adviser contacts you without first asking for information, this could be a clear case of mis-selling. Speak to a specialist pension solicitor about making a claim.

Frequent switching of pension funds—especially between different providers—can be a sign of mis-selling and unethical financial advice. This practice, known as “churning”, is often driven by financial advisers seeking commission payments rather than acting in your best interest.

How to Spot Churning:

The FCA has banned churning, but we have seen many cases where advisers continued to profit from frequent pension transfers at their client’s expense.

What You Should Do: If your pension has been transferred multiple times without a clear financial benefit, you may be entitled to compensation.

You may fall victim to pressure-selling even if you approach a financial advisor or pension provider yourself. This happens when aggressive tactics are used to pressure you into making a rushed decision. Common high-pressure tactics include:

High-Pressure Tactics in Meetings:

Aggressive Follow-Ups:

The Financial Conduct Authority (FCA) provides clear guidelines for how pensions and other financial investments should be sold, and all of these tactics violate those standards. Many of our clients were pressured into signing forms in meetings, and our largest group action claims against SIPP providers involved motorcyclists couriering acceptance forms to customers’ homes—refusing to leave until they were signed.

Red Flag: If you felt rushed or pressured to decide on a pension, this is a major red flag of mis-selling.

If a financial adviser promises large returns at little risk, alarm bells should ring. Investments are never guaranteed, and exaggerated claims are a common sign of mis-selling.

There are very strict FCA rules on what projections can be given for the future return of pensions and other investments which must come with a compulsory illustration document. The projections must be realistic based on individual product and industry performance. These typically assume:

Any projections over 10% annually should be taken with a pinch of salt. While stock markets can experience high returns in a single year, this cannot be sustained long-term.

Red flag: Many mis-sold pension cases we’ve handled involved customers being promised returns of 20% or more. If an adviser makes exaggerated claims, seek a second opinion before making any decisions.

Before working with any financial adviser or pension provider, always check if they are registered with the FCA. If they aren’t, stop immediately—this is a serious red flag.

The primary legislation governing financial services (The Financial Services and Market Act 2000) makes it a criminal offence to offer advice or manage financial investments including pensions without FCA authorisation (Section 19 – “The General Prohibition”). Advisers and providers must appear on the FCA register, which is publicly available on the FCA website.

Warning Sign: Many of our largest pension mis-selling cases involved unregulated introducers. These individuals—motivated by commissions as high as 30%-40% of the pension investment—would cold-call customers, provide financial advice illegally, and push them into signing paperwork. In certain instances, an Independent Financial Adviser (IFA) was used to ‘rubber stamp’ the process, giving the false impression of regulatory compliance.

What You Should Do: Before engaging with any adviser, check the FCA register yourself. If they are not listed, do not proceed. If you have already taken advice from an unregulated adviser, seek legal guidance immediately.

The FCA’s Conduct of Business rules require authorised financial advisers and pension providers to provide customers with certain written information and documents. Regardless of application and acceptance forms, if any of these documents are missing, it’s a major warning sign of mis-selling:

Key Documents Your Adviser Must Provide:

If your adviser fails to provide any of these documents, something could be wrong. Another major warning sign is evasive behaviour—if your adviser avoids answering basic questions about fees, investment risks, or why a product is suitable for you.

Red Flag: Some advisers provide all the required documents, but they misrepresent risks or give unsuitable recommendations. Always review these documents thoroughly. Ask questions if something doesn’t seem right, and if you don’t get clear answers, then it is a serious warning and you should probably reconsider your options.

These warning signs are strong indicators that your pension may have been mis-sold. If you find any of them applicable to your case, it is necessary to act quickly.

Consulting with a pension solicitor will enable you to collect evidence for your case and consult on how to claim the compensation you are entitled to.

If you think you have been mis-sold a pension, do not delay – contact a pension mis-selling specialist today to secure your financial future.