Audit - English ICA issues pension guidelines

New guidelines on the costs of investigation and compensation of pension transfers and opt-outs have been issued by the English ICA.

Intended for auditors of intermediaries and personal pension providers, they are designed to help the management of such companies and the preparation of accounts.

The document takes in the consultation on proposals for the review and compensation of remaining mis-selling cases issued by the Financial Services Authority and Personal Investment Authority last month. It includes experience gained since the original guidance was issued in early 1995.

Its release followed a report by actuaries Bacon & Woodrow which said the Inland Revenue has received #2.3bn in tax on #4.7bn of profits from pensions mis-sold by the insurance industry.

Richard Chapman, a partner at the firm, said the total cost of pensions mis-selling could double the figure of #11bn for mis-selling produced by the FSA last month.

Coopers & Lybrand’s Clare Thompson, head of the institute working party that prepared the new guidelines, said they would benefit many users. ‘Personal pension providers and intermediaries continue to have a challenging task ensuring their financial statements properly reflect the impact of the mis-selling of personal pensions,’ she said.

The guidelines coincide with a campaign by the FSA to raise awareness about personal pensions mis-selling. Forming a second phase of its review, the campaign focuses on younger investors – those generally 15 years or more away from retirement. There are believed to be up to 1.8 million people in this category.

An FSA spokesman said: ‘Younger age groups were less likely to think pensions mis-selling applied to them. The first phase of the review concentrated on the ‘priority cases’ – those near retirement and those that have died since.’