When Ms. W discovered her Free Standing Additional Voluntary Contributions (FSAVC) policy from Allied Dunbar (now Zurich) may have been mis-sold, she reached out to it Is Your Money for assistance.
Understanding Free Standing AVCs and the Issue of Mis-selling
Free Standing AVCs, or FSAVCs, were investment vehicles marketed in the 1980s and 90s as a way for employees to supplement their workplace pensions. The vast majority of these were sold by tied representatives (employees) of the life and pension company (Allied Dunbar in this case).
The contributions are made separate from any employer-backed pension schemes, potentially offering greater control and flexibility. However, issues with FSAVCs often arose when employees were not made fully aware of their alternative options.
In Ms. W’s case, she believed her FSAVC may have been mis-sold as her advisor had not adequately explained alternative options at the time of sale. With this in mind, she sought guidance from It Is Your Money, who specialise in addressing mis-sold financial products.
First Steps: Submitting the Complaint to Zurich
It is not essential that our clients provide documentation, but Ms. W was able to, and we were then able to quickly identify several potential issues in how her FSAVC was sold.
Key to the case was the question of whether her advisor had presented the alternatives to Ms. W. There was no indication in the paperwork that these options were properly explained, which raised a potential red flag. Armed with her policy number and all relevant documentation, It Is Your Money submitted the complaint directly to Zurich, seeking a fair review of the sale.
However, after a month, Zurich’s response was disappointing. They declined the complaint, citing numerous documents from the time of the sale that highlighted the alternatives available. This initial rejection could have been the end of the road for Ms. W, as many people might feel discouraged and accept the insurer’s response. But It Is Your Money, believing Zurich’s decision was unfair, decided to pursue the case further by escalating it to the Financial Ombudsman Service (FOS).
Taking the Case to the Financial Ombudsman Service (FOS)
The FOS is an independent body that helps resolve disputes between consumers and financial service providers.
In submitting her complaint to the FOS, It Is Your Money argued that despite what Zurich had said about the documentation, Ms. W was not given adequate information about alternative AVC options at the time of her FSAVC sale. They pointed out that she should have been made aware these that could have potentially delivered better benefits and value for her money.
One key point raised was that, under the regulations in place in April 2000 set by the former Personal Investment Authority (PIA), financial advisors (including tied representatives) were required to provide clear information about other available options, which could have influenced Ms. W’s decision.
The FOS examined the evidence and initially sided with Ms. W, agreeing that Zurich should conduct further investigations and calculations regarding her FSAVC. However, Zurich disagreed and requested a formal Ombudsman review, marking the next and final step in the FOS complaint process.
Final Review by the Ombudsman
The Ombudsman’s review is a formal and thorough process, and their final decision is legally binding if the consumer accepts it. The Ombudsman examined the case independently and upheld the complaint. The Ombudsman directed Zurich to carry out calculations to determine the financial impact on Ms. W of not having been presented with alternative AVC options.
After Zurich completed the calculations as instructed, they offered Ms. W a settlement of £4,403.14. The result was a welcome relief for Ms. W, affirming that her persistence and the support from It Is Your Money had paid off.
Ms. W’s case highlights the importance of transparency in financial advice and the need for consumers to be fully informed of their options. When that transparency is lacking, mis-selling can occur, and consumers may be entitled to redress. Thanks to the persistence of It Is Your Money, a seemingly closed case with Zurich ultimately led to compensation that more accurately reflected what Ms. W was entitled to.