The Danish Financial Supervisory Authority (FSA) has warned pension funds against giving false or misleading information to customers wishing to leave, at a time when competition in the sector is hotting up.
The warning follows reprimands for AP Pension for breaches of good practice for insurance distributors, after the firm gave misleading information to customers who had requested to have their pension scheme moved to another provider.
Ulla Brøns Petersen, director at the Danish FSA within its consumer affairs office, said: “We want to send a clear message to the pension industry that customers must be able to rely on the accuracy and truthfulness of the information provided by the companies.
“In addition, customers must have balanced advice on both advantages and disadvantages when faced with having to make an economic choice.”
Brøns Petersen said that increasing levels of competition in the Danish pensions sector had caused companies to put systematic strategies in place to retain pensions deposits, even though customers were changing providers.
“This case underlines the necessity for guidelines in this area to ensure that customers get fair and loyal treatment,” she said.
The FSA said some AP Pension customers had received letters from the provider stating that they would incur a transaction fee of 1% of their savings in the form of a spread between the buying and selling prices of funds, after requesting transfers to other providers.
Letters also told customers they would miss out on future bonus allocations, which had at the time not been set.
On top of the three reprimands, the watchdog issued AP Pension with an official order to inform those customers who did not move their funds what they may have lost on the basis of these letters, and about their rights and options.
AP Pension said in a statement that it regretted the case and would advise customers in accordance with the FSA’s order.
The watchdog said that talks had been taking place in the industry for some time about new guidelines for companies’ behaviour around the transfer of pension schemes.