Boleat fuels row over pensions

Mark Boleat, director-general of the Association of British Insurers, came under fierce attack yesterday after claiming in his speech to the National Association of Pension Funds conference that the pension transfer scandal had generated only a little public concern.

Bill Day, pensions officer with the GMB general union, said: "His comments sounded to me like Radovan Karadzic, the Bosnian Serb leader. Even as bombs continue to fall on Sarajevo he continues to insist that nothing is happening."

Hundreds of GMB members are now to be supported by their union in taking legal action to win compensation.

Further criticism was made by Tom Ross, chairman-elect of the NAPF.

He dismissed as "rubbish" other claims by Mr Boleat that sales of life insurance products had primarily been affected by tough new regulatory requirements from the financial services watchdog, the Personal Investment Authority.

More than 1.5 million people were wrongly advised to set up private schemes.

David Morgan, group pensions manager at Nestl UK, said that one reason complaints from the public about mis-selling had not come in was because the City's leading regulator, the Securities and Investments Board, had specifically asked people to wait until they were themselves contacted by their personal pension providers.

In his aggressive speech, Mr Boleat said he hoped policy-holders would not be needlessly "mis-sold the concept" that they had all been badly advised.

Individuals who bought a personal pension had to take some responsibility for what happened.

"This is particularly true where people wanted a personal pension against good advice and where it was not in their interests," he said.

Complaining that standards for the behaviour of insurance salesmen were much higher than for other retail sectors, he said no one who went to buy a car was asked to spend 90 minutes so that the salesman could decide whether they needed it.

"If someone goes for a job the employer does not have to tell them that they could get £20 a week more if they go somewhere else down the road," he added.

Mr Boleat acknowledged that the industry would have to act quickly to pay compensation to those entitled to it to restore confidence in its activities.

However, he added: "The cost of redress is not going to be met by some great compensator in the sky. The only people who can meet the bulk of this cost for sales made by life offices or their representatives are other policy-holders." Warning that the effect of the compensation bill would be felt by his members for years to come, he said:

"In the longer term it is not tenable to have a system that leads to a significant number of failure each year.

"This causes another group of institutions, subject to a far more onerous regulatory framework, to have to meet a substantial compensation bill."

Mr Boleat blamed the mis-selling scandal on several factors, including poor regulation and a lack of understanding of just how successful personal pensions would be when they were first introduced in 1988.

"Inevitably, when there is a new market some mistakes are made, and when the volume of business greatly exceeds the highest expectations, the scope for mistakes is magnified. Mistakes duly occurred."

He argued that one reason for the attraction of personal pensions had been the historically tiny benefits paid out by occupational schemes to individuals who changed jobs regularly.

One manager of a large company scheme who asked not to be named, said:

"It's what we have come to expect from him. It's all good knock-about. The problem is that if he does not accept responsibility for what happened his side of the industry will never regain the public's confidence."