Danish ombudsman takes Sampension to court over unit-link marketing
The Danish consumer ombudsman has issued a writ against Sampension over the way it has been persuading customers to switch to unit-link pensions from traditional with-profit products.
The government-appointed independent regulator has singled out an individual case where a Sampension scheme member made a disadvantageous choice to change products following a marketing letter.
The move could be seen as a shot across the bows at a pensions sector under pressure to move its customer base away from traditional pensions, which can make heavy demands on reserves.
Consumer ombudsman Henrik Øe told IPE: “I want a court judgement on this, as it seems it could be a general problem because there is this movement towards general (unit-link) schemes at the moment.”
The way these products are marketed could have an impact on an individual’s economic situation, he said.
“Pension funds should be careful how they write to people because, if they give advice, they need to have analysed the individual circumstances,” he said.
In this case, a customer who had cancer switched pension product after being pressed for an answer by Sampension, following a marketing letter, the ombudsman’s office said.
The new product was recommended even though it did not include the spouse’s pension, which had been a part of the existing pension product, it said.
Sampension had marketed its new product – 3 i 1 Livspension (3-in-1 lifelong pension) – by sending out letters to a large number of customers.
The letters contained the phrases: “We think you should choose the 3-in-1 Lifelong pension” and “based on an overall assessment, Sampension recommends you choose the new scheme”, the ombudsman said.
Øe said: “Sampension, in my opinion, neglected its duty to provide advice. The company gave the customer the impression there was individual counselling, although this was not the case.”
He added that this had given the customer a flawed basis for making her decision.
Two years after changing to the new product, the customer died.
However, Sampension said the case was about whether or not customers had an obligation to read the entire material they were sent about switching product.
It said the letter sent to customers contained explicit information about the change of spouse coverage.
“It is Sampension’s view that there can be no doubt an active choice must be made,” it said.
The pension fund said it had offered to settle the case with an ex-gratia payment.
Last June, Sampension was censured by the Danish financial regulator Finanstilsynet over the same case.