personal finance

British Steel pension probe reveals role of single firm


A single firm advised more than 800 steelworkers to give up their guaranteed pensions before the Financial Conduct Authority halted its activities over mis-selling concerns, the regulator has revealed.

The disclosure from Andrew Bailey, chief executive of the FCA, comes nearly a year into the regulator’s probe into concerns that thousands of Tata steelworkers may have been poorly advised to give up valuable guaranteed pensions.

It is the first time the FCA has given an indication of the scale of potential pension mis-selling by individual firms to members of the British Steel Pension Scheme (BSPS). The regulator said that nearly half of transfers looked at in its mis-selling probe were processed by a single firm.

Nick Smith, MP for Blaenau Gwent, called for the regulator “to do better”.

About 40,000 members of the British Steel Pension Scheme, the Tata Steel retirement fund, had the choice to trade their guaranteed pensions for a cash lump sum and transfer to a riskier plan as the scheme was restructured. To date there have been 8,000 transfers worth about £2.8bn.

But last year, as transfers from the British Steel scheme ramped up, the FCA intervened to halt the activities of 10 advice firms due to concerns that dubious advisers, incentivised by commissions and high fees, were descending on steel towns, such as Port Talbot in Wales, and enticing BSPS members to transfer their pensions.

In a letter to Mr Smith this month, the FCA chief said advice firms which had accounted for the pension transfers of 1,911 steelworkers — a quarter of those who eventually went on to take pension transfers — had been assessed.

“Of these, 872 transfers were arranged by a firm that ceased to advise on transfers following our intervention,” said Mr Bailey.

He added that he could not provide a breakdown of transfer figures for individual firms because this would amount to a breach of the Financial Services and Markets Act, which prohibits the disclosure of confidential information.

“We are also conscious that we do not prejudice the continuing work that we are doing related to BSPS and financial advice more generally,” wrote Mr Bailey.

The update from Mr Bailey came after the FCA disclosed in January that only half of the pension transfer advice for steelworkers it had reviewed was considered suitable.

“Total transfers are now more than 8,000 out of the BSPS scheme,” said Mr Smith. “I’d like a straight answer about how many of these the FCA is concerned about.”

The letter from Mr Bailey to the Welsh MP came to light after the FCA was criticised last week by an influential parliamentary committee for not banning “contingent charging” — a fee model said to have driven poor advice to steelworkers.

“Once again the FCA closes the door after the horse has bolted — after people’s life savings and retirement plans have been compromised,” said Frank Field MP, chairman of the Commons work and pensions select committee.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.