British Steel members not given suitability reports before transferring

Manufacturing-Plant-Factory-Industrial-700x450.jpgSome 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.

A letter from Work and Pensions Select Committee chairman and MP Frank Field to FCA supervision director Megan Butler contains anonymous testimonies from steelworkers.

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.”

These revelations come as a 10th firm, Acklam Financial, based in Middlesbrough, voluntarily agreed with the FCA to stop doing work on DB pension transfers related to British Steel.

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.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. And now we can all look forward to paying the FOS and FSCS levies that result! Thanks again to the FCA for standing in the wings while this was unravelling.

    Perhaps if it came out of the FCA employees’ salaries and pension funds they would show a little more interest and concern? Do they even realise that the levies come out of our salaries and pension funds…

  2. Very worrying if true.

    Are these IFA still trading, if so what action are FCA/FOS taking?.

  3. At least they can’t complain that the suitability report was too long and complex for them to understand.

  4. This is very worrying – after reading the testimonies, it’s clear that at least some of them are talking about Active Wealh. If true, the adviser/director needs to be held liable for complete lies to MPs in his letter on their process, and not having any duty of care to clients.

    Ridiculous that one guy could undermine the credibility and integrity of our profession.

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