At the risk of repeating myself, I am going to return to a topic I raised a couple of months ago: reform of the Financial Services Compensation Scheme and pension scams.
In this case, there is a happy coincidence in the aims of the regulator, Government and advisers. It is in no one’s interests that consumers are seduced into high risk or fraudulent investments in which they are highly likely to lose their money. If an adviser is involved, they may have recourse to the FSCS but it is surely better in terms of consumer protection for the FCA to prevent these losses in the first place.
And yet, the FCA has been slow to take action. I have had a number of discussions with various officials. And while there are a number of things they can point to, action taken so far has not been effective in stemming the tide. There is a worrying inertia. It seems to have been abandoned to the “too difficult” box. The FCA seems to want prior proof that a measure would be effective to consider it.
The list of products unsuitable for retail clients needs constant updating and it needs to be more difficult for consumers to access to them. Maybe more action is needed on the use of introducers. The FCA points to the existing framework and has issued guidance but I do not see this having the traction needed to change behaviour. The scammers are exploiting grey areas in the system to give themselves credibility. It should be clear cut that they are not legitimate.
It may be that our ideas would not have the desired effect but proactive exploration of a solution is needed. Accepting the status quo is untenable because the system as it is is not working. People are being conned out of their pensions. The FCA needs to do more.
Chris Hannant is director general at Apfa