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FCA hunts for list of all advisers doing British Steel pension transfers

FCA director Megan Butler

The FCA has raised the prospect of further sanctions over advice to transfer out of the British Steel Pension Scheme as consumers could be in line for compensation payments.

Giving evidence to MPs on the work and pensions select committee, FCA supervision director Megan Butler said that while the regulator had so far acted to stop rogues causing any more damage, it would soon enter a second phase of work where it could look at sanctions and redress for unsuitable recommendations.

The FCA is also attempting to get information on all advisers who have done British Steel transfers, according to Butler.

She said: “What we have been very focused on over the last month or so is making sure that we can cauterize the immediate harm. That is not the end of this story. If there are people who have found themselves in schemes on the back of unsuitable advice they may well be entitled to compensation and that is phase two of this process.

“In appropriate circumstances people will find themselves referred for enforcement action.”

Butler recapped the FCA’s action over British Steel defined benefit transfers, naming the firms that had ceased giving advice as a result: Active Wealth, Pembrokeshire Mortgage Centre Limited, Mansion Park and a fourth firm that is still under investigation.

Of the 38,000 BSPS members, 12,200 have applied for a transfer value and more than 2,000 transfers have been made or are in progress.

Butler said: “We recognise that this advice is possibly the most complex financial advice that is ever heard by the client but also provided by the adviser which is why they need a particular permission…. Advisers are not getting it as right as they should be”

The FCA has hosted four seminars with advisers so far, two in Wales and two in Doncaster, and has written to 148 more.

The 10 firms the FCA has visited account for three-quarters of the DB transfers from BSPS.

An open public meeting will take place tomorrow with the FCA, The Pensions Regulator and The Pensions Advisory Service.

Butler said: “Intelligence is what we need, intelligence is what we gathered when we went down for our seminars…if we get that information we can and we do act on it and take action on those not providing [suitable] advice.”

Buter described contingent charging – where advisers have levy additional charges based on a transfer occuring – as an “Inherent conflict of interest that really needs to be well managed in all of this.”

She urged unregulated introducer firms to stay “absolutely and clearly away from that line which is the provision of advice” and noted that fund choices and the ongoing charges paid for them were “absolutely central” to getting transfer advice right.

Also giving evidence this morning, First Actuarial director Henry Tapper, who has been campaigning over BSPS transfers, said advisers he saw were typically charging 2 per cent of the transfer value for advice.

He said: “My worries were that the advice that was given was biased towards advice to take money away from the scheme because that was the way the IFA would be paid.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Here’s an idea for how the FCA could gather data on which IFA firms have been transacting DB Transfers from the BSPS. Ask all firms to self report. Think you can handle that Ms. Butler?

  2. I suppose we’d better earmark another few thousand for the FSCS levy that will arise from all of this.

    As regards British Steel pensions, Tata and NEST, is it all a coincidence or………..? Just wondered.

  3. I wonder how many of the firms that have been told to cease, or are being visited/investigated, are small, directly authorised IFA businesses?

  4. Bethell Codrington 13th December 2017 at 2:32 pm

    “The FCA is also attempting to get information on all advisers who have done British Steel transfers, according to Butler”.
    Why not ask the Trustees for the “IFA sign off forms” they are required to have before making a payment. If they are “insistent transferors” then which Pension Trustee the transfer is going to and look at their files. If the FCA cant do basic investigations, what is the point in having them?

  5. If all the above scheme members were to request a Transfer Out of Benefits, can I ask, which ones wont get any money, also as the transfer payments are depleting the residual funds, surly the Funding Shortfall as a % is expanding out of control and yes Duncan, I think the Govermnet intervention is about both schemes run by Ta! Ta! its in the name!!

  6. Agree with Bethell, just ask the trustees – simples!

  7. As always many seek to comment without having all the facts.

    Yes there has been unauthorised companies and individuals operating and they are being shut down. The big issue for all regulated advisers being the authorised advisers signing off these unauthorised companies and individuals cases have completed most of these as Insistent Clients. They then have been placed into unsuitable unregulated investments. To this end I am sure as many have already stated, we will be looking at FSCS levies somewhere down the line. This keeps happening and this option needs to be closed to protect consumers and advisers.

    The witch hunt has started and many good advisers firms are being unfairly tarnished, with the same brush as the bad.

    There needs to be some balance, not all the transfers instructed are unsuitable and this really does need to be born in mind when making comments. I spoke with an adviser the other day, very critical of any transfer, but when I ask his understanding of rule 11b (high/low as the workers call it), he did not have a clue, did not know what it was, what had been lost. When I then asked him further questions concerning the BSPS2 he also did not have a clue. He had effectively jumped on the band waken, the witch hunt without actually knowing all the facts.

    I would also add that any local adviser has been inundated with requests for advice. This started four months ago. Whilst the help now being received is very much appreciated, local firms especially those with transfer permissions mainly closed to new business months ago.

    I would urge all to be balanced with your comments, yes some have been misadvised, but many have received good advice, don’t lump every one in the same boat.

    • I googled rule 11b and it was all about the colour of jodhpurs and riding boots. Then I realised I had downloaded the British Show Pony Society (BSPS) handbook.

      Seems like some advisers have just as much knowledge.

  8. Or the FCA could issue a blanket e-mail to all firms that hold the relevant permissions, requesting them to supply this info.

    Oh, hang on, I forgot, the FCA register is such a shambles that it doesn’t know WTF’s on it or what they’re authorised to do.

  9. I can give you a list I have members willing to share their experiences with over a dozen firms, in my opinion, the FCA need to enforce an immediate ban on all DB transfers – the writing on the wall with major firms pulling out in doing this type of business and ultimately all good advisers are going to pay for this with an increase in levies when the claims roll in

    • The problem is that for some people, transferring out will be the best route so removing this option is unfair on them.

      I cannot understand why, as a profession, we continue to show how bad we can be.

      I have seen first hand advisers desperately trying to justify reasons to transfer to earn fees.

      There needs to be a way of getting these so called advisers out of the industry.

      50% of cases as reported on newsnight is just not good enough.

  10. They are Behind You ! Merry Christmas panto lovers.

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