MPs promise further British Steel charging probes

Work and pensions select committee chair Frank Field

Work and pensions select committee chair Frank Field says it expects to publish further reports on adviser charging in light of the British Steel pensions saga.

In its report on British Steel published on 15 February, the committee called for a ban on contingent charging and Field tells Money Marketing more work will be done on adviser charging.

He says: “I am sure the committee will want to look at how the charges are limited. There will be a whole series of further reports and this will roll on and on.”

Field argues evidence from the investigation he led into British Steel shows the FCA and The Pensions Regulator must improve their performances.

He says the FCA “seems captured by the industry” when it is “supposed to be the spokesperson for the consumer”.

He adds the way some steelworkers were advised on pension transfers raises questions about how information is provided to clients and the unequal relationship between the adviser and the client.

He says some of the stories the committee has heard have been sobering.

Field says: “We will be publishing a letter with people’s names redacted who will regret their decision [regarding transferring out of the British Steel Pension Scheme].

He adds: “One example we have, and shadow pensions minister and MP Jack Dromey has talked about, is listening to the interview of a steelworker who was a team leader and was in tears about what happened to him.”

TPR declined to comment and FCA referred to the letter chief executive Andrew Bailey sent to Field on where he rejected the criticism of the watchdog.

Money Marketing will be taking an in-depth look at the DB transfer market at our upcoming conference, Money Marketing Interactive. Register now and see the full agenda at http://mmi.moneymarketing.co.uk/london/agenda/2018-agenda

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. field lad the horse has bolted and you have finished last again

  2. I saw a story about a British Steel worker who claimed to have lost £200,000 as a result of transferring his benefits out of the scheme.

    However, the story was misleading as it turns out that the loss was caused because he transferred out before Tata Steel paid more money into the British Steel scheme. Thus boosting the Cash equivalent transfer values (CETV). Some of his co-workers transferred at a later date and got higher transfer values than he had been given.

    Obviously the adviser should have told him that there was a possibility that Tata Steel would pay more money into the scheme which would boost transfer values and that he should wait.

    The employee had been told by the scheme that a revaluation was taking place and that he should place his transfer on hold. But he still went ahead and is now trying to place all of the blame on the adviser.

    • I also saw this story, and the employee claims he showed the letter to the Adviser, who still recommended a transfer.

      • If the employee showed the letter to the adviser and they still recommended that he transfer then obviously the adviser is at fault. However, the employee is also at fault because he could have said “No I want to wait and see what happens in relation to the re-valuation.”

  3. Let us not forget everybody had to transfer either to BSPSII by election or the PPF by default. The third choice of a transfer out being confined to deferred members. The initial non- statuory timescale and lack of real detail on BSPSII alternative on which to make
    a decision was a disaster in the making and likely to impact every member. With hindsight there should have been a super complaint made to both TPR and possibly FCA
    about the dilemma. Hindsight is a wonderful thing I know but could this be a watershed moment in the increasingly unsustainable world of DB pensions? Maybe the pensions equivalent of Waterloo?

  4. @ Duncan Jones

    Duncan you make a very valid point and I suspect this was something the select commitee either did not understand, did not want to understand or just ignored. Given that this is crucial in this case, we see again a complete lack of understanding this complex issue by busy body MPs trying to make a name for themselves.
    On a another issue – Field should butt out of trying to influence the regulator on how firms charge. I will say this again, the way firms charge for their services has nothing to do with public servants. MP need to be reminded that they are public servants not dictators

  5. Perhaps Frank Field should try to be impartial for once.

    His bias is often scary.

    All very nice reading out a customer sob story, but what did the IFA. Was he/her even asked.

    • Looking into this further I found the following:

      Tata worker Richard Bevan claimed he had lost almost £200,000 by transferring out of the British Steel Pension Scheme (BSPS) after seeking advice from a local firm.

      In December, he told BBC Wales he was advised to leave the scheme even after he received a letter from the BSPS warning him a revaluation was under way that could mean he had much more in his savings pot than previously thought.

      The firm he used, Swansea-based Celtic Wealth Management, said it did not offer advice and acted as a so-called introducer to Midlands-based regulated financial advisor, Active Wealth.

      Both companies said they acted properly throughout.

      As Active Wealth have now gone into liquidation his claim will go to the FSCS with a maximum payout of £50,000. Meaning that he has suffered a potential loss of £150,000.

  6. Oh dear lord Mr Field ?

    There is no direct link between cost / charges and bad advice

    “Advice” is either Good or Bad
    “Cost is either Cheap or Expensive

    Example-: adviser charged £50 quid to advise … turns out that advise was deemed BAD

    For the same job

    Another adviser charged £1,500 and the advice deemed GOOD

    Now the advice has not and never will be altered by what has been charged

    However one may argue the client has been over charged by the second adviser…… that is just opinion, but the fact remains the advice was sound

    Stop trying to find a direct link between advice and charges its not there !!!!

    • Well said, DH.

      The argument about contingent charging and/or the amounts charged (by way of Adviser Charges from a product or by invoicing a direct fee) is a completely separate discussion piece and, quite frankly, nothing to do with pompous MPs.

      By far the the most important factor in all of this is ….. was the advice to transfer (or keep the scheme benefits) sound and backed up by a good quality file? To be honest, without seeing the files for each case we’re all guessing. Yes, guessing folks. A few sound bites and selective comments does not enable us to pass judgment, whatever our fears about phoenixing firms etc.

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