Free Standing AVCs, more commonly referred to as FSAVCs are standalone pensions used in conjunction with an occupational pension. They are different from standard AVCs (additional voluntary contributions) as they are set up by a third party and not your employer.

FSAVCs allow you to make further contributions over and above your standard occupation pension scheme. They have, however, been mis-sold in a number of circumstances.

These schemes are very similar to a personal pension, however, the fees attached to them and the performance of investments can be very poor, this means that if you had used your employer’s AVC scheme, you may have been far better off! The reason for the high charges is because they often have to cover the salesman’s commission, along with the costs of running the policy, whereas, in contrast, the costs of an AVC policy are usually borne by your employer, meaning that you keep every penny of the money you invest (subject to the investment performance).

The main reason why there has been a large amount of these policies mis-sold often boils down to the complexity of the rules when these schemes were introduced back in 1988, these were not fully understood by the people and companies selling the policies which have led to consumers being disadvantaged.

How do I know if I was mis-sold an FSAVC?

• There are several signs that you may have been mis-sold an FSAVC. These can include:
• You weren’t told that you could make additional voluntary contributions to your existing occupational scheme
• You weren’t informed of the higher costs associated with your FSAVC
• You weren’t given information outlining how your FSAVC funds would be invested
• You weren’t warned that your FSAVC wouldn’t benefit from employer contributions