Advisers under FCA scrutiny over British Steel pensions

Advisers under FCA scrutiny over British Steel pensions

The Financial Conduct Authority (FCA) is concerned about the advice being given on defined benefit (DB) transfers out of the British Steel Pension Scheme (BSPS).

The regulator has an ongoing programme of "visiting advisers in the Swansea area and Port Talbot area, reminding them that there are requirements” when advising clients to transfer their pension pots, said Christopher Woolard, FCA’s director of strategy and competition.

Speaking at a hearing today (15 November) as part of an inquiry by MPs into the impact of pension freedoms, which is being conducted by the Work and Pensions Committee, Mr Woolard said the principle route for BSPS members to access their pensions should be through advisers.

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Last week, Henry Tapper, pensions expert and founder of Pension Playpen, warned that there is little evidence of financial advisers suggesting anything other than transfers to these members, after spending a day speaking to these individuals in Port Talbot.

Around 130,000 individuals will have to choose to move their pension pots to a new plan being created, BSPS II, or stay in the current fund, which will be moved to the Pension Protection Fund (PPF).

In August, Tata Steel UK (TSUK) got the go-ahead to offload BSPS and create a new defined benefit fund.

As part of the deal, The Pension Regulator gave its formal approval to a regulated apportionment arrangement (RAA).

More than 7,000 members of the scheme have requested a transfer value quotation between April and September this year, with more than 700 requests totalling more than £200m being concluded or processed during that period.

As part of today's hearing Frank Field, chair of the Work and Pensions Committee, questioned Nicola Parish, executive director of frontline regulation at The Pensions Regulator, on what the organisation is doing to prevent these members of being scammed.

He said that these individuals pension pots are “such a honeypot for these crooks”.

Ms Parish replied that the regulator is “in close contact with the [BSPS] trustees”.

She said: “We are making sure that all of the information is getting out to members, to help those members spot and avoid a scam”.