Some British Steel Pension Scheme members did not receive suitability reports from advisers before they transferred out of the scheme, according to a document published today.
These testimonies shed light on the transfer advice steelworkers received in areas such as exit fee charges and the “sales tactics” and bias towards transferring, including the involvement of unregulated introducers.
The committee says these examples “illustrate key areas of concern” that it hopes will assist the FCA’s work into the quality of advice on transfers out of BSPS.
For example, there are two case studies concerning suitability reports where one individual, referred to as Correspondent B, says: “We were never presented with a suitability report.”
Another person known as Correspondent D adds: “I also discovered that I should have had a suitability report before transferring, which I didn’t receive until I requested one nearly four months after transferring.”
When it comes to incomplete and unclear fee disclosure there are four examples of bad advice where one IFA never mentioned any exit charges.
Another was told that their fees would be 0.6 per cent per year while the true fees were 2.9 per cent as well as a 5 per cent clause to get access to their money in the first five years.
The letter provides examples of unregulated introducers who used sales tactics in promoting transfers.
As Correspondent C says: “[An introducer] also asked my wife if she had an occupational pension, which she has with local government, he said he could look at transferring hers too. He didn’t once suggest staying in BSPS or the Pension Protection Fund.”
Furthermore, there are case studies of people being stuck in a receiving fund with a 5 per cent exit penalty even when they made it clear they intended to retire early.
Correspondent E says: “I am now locked into a fund which is holding me hostage due to imposing a 5 per cent exit fee, after I had signed, for the next five years. I am also tied into each individual fund fee that I was not aware of.”
The FCA is due to publish its policy paper on DB transfers by the end of the month. IFAs hope this will finally give clarity on exactly how they should approach the market.