Comparing + more
Home › Guides › Pension Transfers › Pension Mis-Selling

Pension Mis-Selling: Can You Claim Compensation?

Thousands of people in the UK have been given unsuitable pension advice, leading to significant financial losses. If you were mis-sold a pension product or transfer, you may be entitled to compensation. This guide explains the signs, the claims process, and what you could receive.

10 min read Updated March 2026

What Is Pension Mis-Selling?

Pension mis-selling occurs when a financial adviser recommends a pension product, transfer, or strategy that is unsuitable for your personal circumstances. Under FCA rules, advisers must ensure that any recommendation they make is suitable — taking into account your age, risk tolerance, income needs, health, and financial situation.

When an adviser fails to meet this standard, the advice is considered unsuitable, and you may have grounds for a compensation claim.

Important: Mis-selling is about the advice you received, not just the outcome. Even if your pension has performed well, if the advice was unsuitable at the time it was given, it may still count as mis-selling. Conversely, a loss alone does not prove mis-selling — markets go down as well as up.

Common Types of Pension Mis-Selling

DB Transfer Mis-Selling

The most significant area of pension mis-selling in recent years has been unsuitable advice to transfer out of defined benefit (DB) pension schemes. The FCA has found that historically, a large proportion of DB transfer advice was unsuitable.

Signs that a DB transfer may have been mis-sold include:

  • You were advised to give up a guaranteed income for life without strong personal reasons
  • The adviser did not properly explain the risks of leaving your DB scheme
  • You were close to retirement and had no particular need for flexible access
  • The adviser had a financial incentive to recommend the transfer (e.g., ongoing management fees)
  • A proper comparison between staying in the scheme and transferring was not carried out

SIPP Mis-Selling

Being advised to move your pension into a Self-Invested Personal Pension (SIPP) when it was not appropriate. This often involves:

  • Being placed into high-risk, illiquid, or unregulated investments
  • Excessive charges compared to your previous pension
  • Investments that were too complex for your level of understanding

Personal Pension Mis-Selling

The 1980s and 1990s saw widespread mis-selling where people were advised to opt out of employer pension schemes into personal pensions. While most of these cases have been addressed through industry-wide reviews, some people may still have unresolved claims.

Annuity Mis-Selling

Before pension freedoms in 2015, many people were not told about enhanced annuities for those with health conditions, or were sold annuities that did not match their needs. If you bought an annuity on the advice of an adviser and were not informed of all your options, this may constitute mis-selling.

Time limits apply: You generally have six years from the date of the advice, or three years from when you first became aware of the problem, to make a claim. Do not delay — if you suspect mis-selling, seek guidance promptly.

How to Check If You Were Mis-Sold

Ask yourself these questions:

  1. Did the adviser understand your situation? They should have gathered detailed information about your income, assets, debts, health, tax position, and retirement plans before making any recommendation.
  2. Was the recommendation suitable? Did the product match your needs, risk tolerance, and time horizon?
  3. Were risks clearly explained? You should have been told about the risks of the recommended product, including the possibility of losing money.
  4. Were alternatives considered? A good adviser should compare options and explain why their recommendation was the best choice for you.
  5. Were charges disclosed? All fees, charges, and commissions should have been clearly explained before you agreed.

The Claims Process

Step 1: Complain to the Adviser Firm

Write to the firm that gave you the advice. Explain why you believe the advice was unsuitable and what financial loss you have suffered. The firm has eight weeks to respond with a final answer.

Step 2: Escalate to the Financial Ombudsman

If the firm rejects your complaint or does not respond within eight weeks, you can escalate to the Financial Ombudsman Service (FOS). FOS can award up to £430,000 in compensation per claim (for complaints about advice given after 1 April 2019).

Step 3: FSCS if the Firm Has Failed

If the adviser firm has gone bust and cannot pay, the Financial Services Compensation Scheme (FSCS) steps in. For pension advice claims, the FSCS covers 100% of your claim with no upper limit — making it one of the most generous compensation schemes available.

Compensation Amounts

Claim RouteMaximum AwardNotes
Adviser firm (direct)UnlimitedFull redress if firm can pay
Financial Ombudsman Service£430,000For advice after 1 April 2019
FOS (older complaints)£195,000For advice before 1 April 2019
FSCS (firm failed)No limit100% cover for pension advice

Should You Use a Claims Management Company?

You can make a mis-selling claim entirely on your own — the process with the adviser firm and FOS is free. However, some people choose to use a claims management company (CMC) for complex cases.

If you use a CMC, be aware:

  • CMCs charge fees, typically 15–30% of any compensation received (plus VAT)
  • CMC fees are capped at 30% (plus VAT) for financial services claims
  • You can do everything a CMC does yourself at no cost
  • Check the CMC is authorised by the FCA before engaging them
Think you were mis-sold? An FCA-regulated pension adviser can review your previous advice and help you understand whether you have a valid claim. This is separate from the original advice and focuses on assessing whether you were treated fairly. Get matched with an adviser for free.

Protecting Yourself Going Forward

  • Always check that your adviser is FCA-regulated before taking advice
  • Ask for a suitability report in writing explaining why any recommendation is right for you
  • Understand all fees and charges before agreeing
  • Get a second opinion on major pension decisions, especially DB transfers
  • Keep all documentation — letters, emails, suitability reports, and statements

Frequently Asked Questions

Pension mis-selling occurs when a financial adviser recommends a pension product or transfer that is unsuitable for your circumstances. Common examples include being advised to transfer out of a defined benefit scheme without good reason, being put into high-risk investments inappropriate for your age, or not being told about fees and charges.
You generally have six years from the date of the advice, or three years from when you first became aware (or should have become aware) that you were mis-sold. The Financial Ombudsman Service may accept complaints outside these limits in exceptional circumstances.
Compensation aims to put you back in the position you would have been in had you not received bad advice. For DB transfer mis-selling, this could be tens or even hundreds of thousands of pounds. The Financial Ombudsman can award up to £430,000 per claim. If the adviser firm has failed, the FSCS covers up to 100% with no limit for pension advice claims.
You can make a claim directly to the adviser firm and to the Financial Ombudsman for free. Some people use claims management companies (CMCs), which charge a fee — typically a percentage of any compensation received. You do not need a CMC to make a claim.
Yes. If the firm that gave you advice has failed and cannot pay compensation, the Financial Services Compensation Scheme (FSCS) steps in. For pension mis-selling, the FSCS covers 100% of your claim with no upper limit, making it one of the most protective compensation schemes available.
The British Steel Pension Scheme (BSPS) scandal involved thousands of steelworkers being advised to transfer out of their defined benefit pension scheme into personal pensions, often unsuitably. The FCA found widespread mis-selling and set up a dedicated redress scheme. It highlighted the risks of unsuitable DB transfer advice.

Ready to get expert pension advice?

Answer a few quick questions and get matched with an FCA-regulated pension adviser. Free, no obligation.

Get Pension Advice →

Trusted by thousands • FCA-regulated advisers • Free matching service