Pensions - Articles - FOS consultation on interest on pension compensation

 Sarah Abraham, Associate Partner at First Actuarial, says: “What our clients are looking for, above all, is interest calculations that are simple, transparent, and fair to all parties. So we welcome the consultation. It’s good to see the Financial Ombudsman responding constructively to last year’s feedback from industry.”

 The consultation appears to have been launched in response to feedback from the industry following a call for input from the FOS and the FCA last year. Respondents believed that the current rate of interest applied (8% pa) was too high and unfair to firms. They also raised concerns about the period over which interest was incurred, particularly in cases where complaints were delayed.

 Sarah says: “We believe that the current application of 8% interest is unfair to advising firms and we support a reduction. We’d also like to see a single rate of simple interest, which would be easier for both firms and consumers. And to avoid the need for regular reviews, we support linking the interest rate to the Bank of England base rate. We’d also add that because delays are rarely the fault of advising firms, it’s unfair and unnecessary to penalise them when they occur.”