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MP raises fears of steelworkers pension transfer ‘scandal’

A Welsh MP has told Parliament that he fears transfers out of the British Steel Pension Scheme are an emerging “scandal”.

Labour MP for Blaenau Gwent in Wales Nick Smith told the House of Commons yesterday that he was still looking for more help and guidance from the regulator to ensure transfers were appropriate.

Smith said: “I am afraid that a steelworkers’ pension scandal is brewing. My constituents are worried about making the wrong decision on pension transfers, and the FCA is providing insufficient support to steelworkers at this crucial time. May we have a ministerial statement and an action plan from the FCA to support steelworkers who are trying to do the right thing for their families?”

Energy minister and commons leader Andrea Leadsom replied: “Pensions are a complex subject, and anybody trying to make decisions needs the right advice. The hon. Gentleman is right to raise the issue and I encourage him to seek further guidance from the FCA so that he can provide support to his constituents.”

The BSPS has remained in the headlines over the recent weeks ahead of a deadline for members to make a decision on transferring or taking Pension Protection Fund benefits. The FCA has already reviewed client files at 16 advice firms amid concerns that members are being offered inappropriate incentives to transfer. A number of advice firms have already ceased transfer business after discussions with the FCA.

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Comments

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

  1. Mr Smith is quite right to raise his concerns, I too am. Pensions are complex but it is successive governments that have and continue to make them so.

    The handling of the sale of British Steel was questionable and the various governmental and regulatory bodies for once need to combine and implement a cohesive strategy. One can’t blame the former workers for wanting to do the right thing, who doesn’t?

    so far as transfers are concerned, it is unbelievable that after all that has gone before, poor selling practice seemingly based on fear and greed appears to be developing.

    The FCA is right to be looking closely at this issue otherwise there is another mineworkers scheme debacle about to explode.

    I for one do not wish to pick up yet another FSCS levy for the inappropriate actions of a few (which often can’t really be called advice)but which greedily feed on the fears of those who most need proper qualified, professional advice.

  2. ” Emerging scandal ” does not cover it, when I read stories of advisers coming from afar, booking hotels and potentially ” earning” up to 200k in one day. Not a Gold Rush, perhaps a Steel Rush?

    Badly handled by all parties involved, without being patronising this group of workers will need professional advice regarding one of the biggest financial decisions they will have to make, instead they are plagued by salespeople, who will probably end up working for claims companies in the future and going for a double dip.

  3. Although perhaps a little late entering the fray, I think that, for once, the FCA is actually doing most of what it reasonably can to stem the tide of unsuitable transfer recommendations. It has, for example:-

    1. convened regional guidance seminars for advisers,

    2. embarked on a series of arrow visits to IFA’s undertaking this type of business and has

    3. made plain its general view that transfers of this type require the most rigorous standards of DD to establish suitability.

    In the face of the sudden and large scale upsurge in consumer demand for advice in advance of what even the trustees of the BSPS have now accepted was an unreasonably tight time scale for members to reach a decision, resulting in many having been stampeded into making the wrong one, it is perhaps unfair to slate the FCA for not doing more and for not doing it more quickly. No institution could reasonably be expected to organise items 1. and 2. above overnight. For example:-

    1. Staff and other resources have to be allocated (possibly away from other projects),

    2. venues and overnight accommodation have to be booked,

    3. the content and format of the seminars have to be drawn up and agreed (those presenting them can’t just be sent out with instructions to make up their scripts as they go) and

    4. those charged with carrying out the arrow visits to firms have to be told what they’re looking for and how best to handle what they find.

    On this one, I have to say that I’m largely on the side of the FCA. My only reservation is in respect of the issue of contingent charging on a subject which, perhaps more than any other, needs to be advice- rather than transaction-driven.

  4. We were approached by one client in respect of this and the one observation I would make was that the members were simply not given enough time to have a hope in hell of getting appropriate advice.

    It was entirely predictable that large numbers of members would want to know.. what is my best option, but the timescales given (circa 3 months from notification to their membership going to the PPF if they did nothing), were always going to prevent them getting decent advice.

    The DB transfer advice market is already massively overstretched with demand outstripping supply massively, and then suddenly in excess of 10,000 people need advice in 3 months..

    Given the amount of work involved, getting that many people advice in that space of time could simply never happen without massive problems and people cutting corners.

    As it turned out the the client decided against asking us to produce a report and recommendations and decided to wait and see after we explained the issues in meeting the timescales involved.

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