Watchdog Consumer Focus has produced a report criticising a number of practices in the individual personal pensions market causing 'consumer detriment'.

The consumer rights body has written to the Financial Services Authority (FSA) and pensions minister Steve Webb to take action on some of the practices.

Consumer Focus found some consumers were being advised to switch to different pension products with higher charges or higher risk, the growing trend of products with ongoing fees or trail commission, and non-transparent dislosure of charges.
 
Christine Farnish, chair of Consumer Focus, said practice in the individual personal pensions market 'still leaves much to be desired'.

She said, ‘Too many consumers are being persuaded to switch their pension into different pension products which may well leave them worse off.

'Others are signing up to paying trail commission to their advisor for the life of the product - which may be decades - without receiving any tangible benefit.'

The watchdog called on insurance companies should review the use of trail commission and stop it where the consumer receives no benefit.

Consumer Focus also called for the FSA to investigate 'churning' of personal pensions by independent financial advisers to identify mis-selling and strengthen price disclosure measures.

Andrew Strange, director of policy at the Association of Independent Financial Advisers (AIFA), said the report added 'very little new information or analysis'.

He said, 'The report appears to be very thin on evidence to back up some of their claims, which are based on a great deal of conjecture and speculation and undermines the conclusions they draw.

'Extrapolating industry wide conclusions from only 31 individual examples of advice, for example, is not robust research. There is also no attempt to assess the value of the advice given.'

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