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FCA to scrutinise advisers and providers’ role in pension liberation


The Financial Conduct Authority says it will examine the role advisers and providers play in pension liberation as it looks to crack down on unauthorised promotions of the schemes.

Speaking at a Thomson Reuters compliance and risk summit this week, FCA head of enforcement Tracey McDermott said the regulator is scrutinising pension liberation schemes with The Pensions Regulator and HM Revenue & Customs.

McDermott said: “One of the key things we are doing here, again, reflecting the new FCA approach, is looking at the whole value chain – not just those promoting unauthorised business but also at the roles of authorised advisers, pension companies and SIPP providers. 

“The involvement of authorised firms and individuals in a pensions transfer can cloak a scheme with an unwarranted air of legitimacy.

“We are therefore very concerned to ensure those advising or involved in this market really understand what they are getting into and are ensuring they give proper advice to their customers. We will be looking very carefully and very hard at their conduct.”

McDermott added the current trend of pension liberation is “damaging”.

In May, City of London Police said it dismantled a suspected organised crime gang believed to be cold-calling and text messaging people across the UK with fraudulent pension liberation offers.

Pensions minister Steve Webb has pledged to review rules around pension liberation schemes after the arrests and a clamp-down by regulators.


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What price (more) freedoms?

George Osborne will make his last Budget speech of the current parliamentary term this week, and the early media briefings suggest that pensions will again feature heavily in that statement. So what are we able to learn from the weekend’s coverage?


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. This sounds a lot like they are going to try and “stitch up” legitimate companies who have allowed these transfers to happen rather than go after the source – often these are non-advised transfers so unless there is more context to what they are doing this sounds worrying.

    The overall lack of support from the FCA, HMRC and TPR has been laughable… These comments do no inspire confidence….

  2. “In May, City of London Police said it dismantled a suspected organised crime gang believed to be cold-calling and text messaging people across the UK with fraudulent pension liberation offers.”

    So the FCA decides to spend our money targetting advisers et al.

  3. There is actually an easy way to stop this. Allow funds to be accessed legally. The 25% PCLS can be taken and the balance subject to the same rules as Triviality. The whole process under the current Regulatory oversights. That will put paid to the cowboys at a stroke.

    This might actually be welcomed by the population, bring some confidence back into the concept of pensions and allow people to do what the please with their own money – now that would be novel!

  4. Harry Katz

    And what happens after the money is spent?

    Who do they rely on for their retirement income?

  5. I agree with Harry. We do need to look at allowing early access to pots for “life events” but with restrictions so as to not wipe out their whole fund.

  6. @Pension Man

    I think you are missing the point. I know that many advisers have tunnel vision when it comes to pensions, but please consider this:

    1. The subscriptions and the fund built up is your money. If you repay the tax after the PCLS then there should be no problem.

    2. You overlook the point that these are people’s private pensions. They always had the option of not putting in one penny and buying ISAs and Insurance Bonds instead. Bear in mind that until recently a coupe could in theory have a £1million portfolio made up of PEPS, ISAs and Insurance bonds. As such they could take an income of (say) £34,000 (just below the All Share Yield) and still qualify for the Minimum Income Guarantee AND age allowance- as none of this goes on a tax return.

    3. It is the pension industry that is wailing the loudest that fewer are engaging. Hardly surprising if you don’t make it more attractive.

    4. Don’t just assume that everyone will simply ‘cash in’. I am willing to bet that many will still buy an annuity or some form of recognised pension income. However any released cash will no doubt help the beleaguered economy.

    I get very tired when the ‘powers that be’ continually insist on treating savers like morons. It is those that DON’T save who are the morons, so why enforce artificial restrictions on those that make an effort?

  7. @Harry Katz.

    Well said – most sensible comments iro pensions I have read for a while.

    Start a petition – we’ll all support you !

  8. In USA they have a 401K pension scheme that allows early encashment with a 10% penalty tax (on top of normal tax) if you access it early. Alternatively you can take a short term “loan” from your pot, and provided you pay it back within a reasonable period there are no penalties. You also have the option to take money out early and can apply to have the 10% waived for certain events (buying 1st home, disability, hardship for example). If someone is desperate enough to need access to their pension savings and risk huge tax penalties or even fraud, it seems unfair that the government should penalise them for doing so?

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