An influential Government committee has written to the FCA outlining its concerns that the regulator’s protection of British Steel Pension Scheme members remains ‘grossly inadequate’.
In a 15 December letter to FCA supervision director Megan Butler, work and pensions committee chair Frank Field says it is apparent there are “insufficient protections” in place to prevent scheme members from transferring their pots against their best interest.
In the letter, Field asks Butler if the FCA has considered suspending all DB transfer advice while reparative action is taken. He asks if such a move has been discussed with the Government.
He also asks about the role of introducers and if the FCA is confident its qualification threshold for giving DB transfer advice is is adequate.
The committee held an evidence session last week where Butler spoke about the FCA’s work related to British Steel.
Six firms have stopped giving DB transfer advice following the FCA’s British Steel work: Active Wealth, Pembrokeshire Mortgage Centre Limited, Mansion Park, Vintage Investment Services, Retirement & Pension Planning Services and West Wales Financial Services.
St James’s Place also announced last week it would not take on new transfer requests from British Steel scheme members.
In the letter Field says: “While the action the FCA has taken to protect members of the British Steel Pension Scheme is of course welcome, I am concerned that it remains grossly inadequate.”
He adds: “While the protection of requiring those with rights worth over £30,000 to take financial advice before transferring is helpful in theory, it is useless in practice if that advice is shoddy or just plain crooked.”
In the letter Field also questions Butler about the FCA register, asking if the FCA will make it “far clearer” when a company is suspended from certain activities. He also asked why the FCA would not publicise suspensions from the register.
Field also asks if a change in legislation to allow firms to be suspended pending further investigation would help the FCA carry out its work.
British Steel Pension Scheme members have until 22 December to decide what to do with their pension following the separation of Tata Steel UK from the British Steel Pension Scheme. The two main options are to move with the current scheme into the Pension Protection Fund or switch to the new British Steel Pension Scheme.