FCA creates DB transfers database as British Steel work raises red flags

The FCA is setting up a central database on firms involved in defined benefit transfers to help it monitor the sector better, Money Marketing can reveal.

A Freedom of Information Request shows the database stems from the lessons the watchdog says it has learned in relation to the British Steel Pension Scheme.

These lessons are contained in an internal FCA report obtained by Money Marketing.

The report is referred to in the FCA’s board meeting minutes dated 23 and 24 May 2018, when the board  reflected on the work undertaken by the regulator in response to the risk of harm to members of the BSPS following its restructure.

That meeting was attended by the FCA’s senior management including chief executive Andrew Bailey, director of supervision Megan Butler and director of stategy and competition Chris Woolard.

In the report obtained by Money Marketing, the FCA says it quickly learned “the lack of accurate and timely data on transfers” meant its information gathering on British Steel was “reactive and ad hoc”.

The FCA says it could have acted more quickly if it received information earlier from third parties.

The watchdog also says it could have sped up the intervention by two weeks if it had immediately decided to visit the BSPS administrator’s offices to collect data on advisory firms involved transfers.

But it adds: “The practical and legal challenges to obtaining information from the scheme administrators and overcoming their concerns about sharing the data would have made it challenging to have done this sooner.”

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It goes onto say data collection can be improved by obtaining data from multiple sources at regular intervals and better intelligence gathering, including through social media.

The watchdog decided a central database would allow it to “amalgamate data from a variety of sources to provide a better view on which firms are active in the market”.

The board paper also says the database will enable it to validate any data submitted by firms through cross referencing.

Initially this database will include details of the FCA’s BSPS work and 767 firms out of a total of 3,100 firms that hold transfer advice permissions.

Apart from the database, the watchdog says it created a “regulatory beacon” in response to BSPS that involved seminars for advisers, alongside public letters and targeted letters to advisory firms.

According to the FCA, this supervisory approach was very effective as advisers are now aware of the standards it expects and the possible consequences of falling beneath them.

One advantage of the regulatory beacon  is that it encourages people to get in contact and so the initiative has been expanded to pension schemes, the paper adds.

The document notes the regulator “could consider creating similar regulatory beacons in other areas of supervision and across the FCA where we want to have a quick high-level impact in relation to a particular issue”.

These regulatory beacons would be planned, focused, high intensity short bursts of supervisory activity work.

This would include a mixture of seminars, media work, firm visits and targeted firm-specific communications.

At the beginning of the month the FCA warned firms that ignore its concerns about poor pensions transfer advice will face “serious consequences”.

A section of the FCA’s board paper has been redacted, including where it references the watchdog’s work with The Pensions Regulator and The Pensions Advisory Service.

The FCA says “disclosure of some of this information would likely to prejudice the commercial interests of the parties to whom the information relates”.

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Comments

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

  1. I would welcome this register, but wonder, will the FCA also indicate if they have visited the adviser/firm, when and what was the outcome. We will never get a green light, amber or red from the FCA but at least a no action, remedial action and suspension would helpful.

    This would be good for both consumers, advisers and regulators perspectives.

  2. This should have been done in the 1990’s, it’s nearly 30 years too late.
    They should have been working with TPA and DB trustees to keep a record of who was leaving DB schemes and who was giving the recommendations along with the critical yield required.
    They could and should have then been targeting firms where things looked questionable. Since 2013, they could and should have been offloading this responsibility to the SPS issuer.

  3. I don’t think this is proposing a register. It is an internal database that will help the FCA target their intervention work.

    Broadly a good piece of regulatory work I’d say.

  4. Suggestion

    Client seeks advice from a regulated firm with regard an Occupational pension.
    The regulated firm registers the client – the date and the name of the occupational pension on an FCA official register. End of – the FCA can now easily track all occupational pensions scheme advice. Any further work investigations required – the FCA can ask the advice firm for the file.

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