All advisers were interested in was the commission they would earn

BACK IN March 1995, this newspaper published a report about the potential misselling of personal top-up pension schemes, called FSAVCs.

After years of buck-passing and ignoring evidence, the Personal Investment Authority (PIA), the City's front-line "watchdog", admitted late last year that things were not hunky-dory after all.

This week the PIA's soon-to-be successor, the Financial Services Authority (FSA), finally announced proposals for a review of up to 110,000 FSAVCs to check whether misselling had indeed taken place.

The FSA estimates that the compensation bill involved will be in the region of pounds 250m.

At the same time, as our story on the front page of Your Money makes clear, the reviews will be confined to four main areas where it can be easily proved that when a particular FSAVC was sold, the sale was clearly bad advice.

Two points come to mind. The first is how slow these watchdogs are to bark (never mind bite), even where the facts are staring them in the face.

The second point concerns the terms of reference for the inquiry. The report from the FSA admits that the performance of an FSAVC is almost always worse than a company scheme.

So why, given that a million have been sold, aren't all, or at least most, FSAVCs being reviewed?

Well, one argument from the regulator is that they give greater investment choice than in-house schemes. Yet evidence shows that most private top- up buyers replicate the investment strategy that they would have followed in the company option.

Second, the FSA says that many employees may not want their bosses knowing to whom they pay their top-up money, hence the free-standing option.

Yet, given that there is a legal requirement to inform the company pension scheme that someone is making private top-up provision, that argument does not hold water.

The reality is that, in the majority of cases, advisers who sold these private plans carried out virtually no checks as to whether one scheme was better than another.

All they were interested in was the commission they would earn from the sale.

The FSA blithely suggests that policyholders who want to can ask for their FSAVC to be reviewed.

I urge any reader of this column with a private top-up scheme to do just that. You may well have lost thousands of pounds. Dig out the policy details and write off now.

FINALLY, thousands of readers have called to ask for a free copy of The Independent's Guide on Independent Financial Advice, which tells you exactly how to find an honest IFA. It comes with a list of names (and telephone numbers) to whom you can turn for help. Call 0117-971 2932 for your copy.