Several steelworkers appear to be transferring out their defined benefit (DB) pensions from the British Steel Pension Scheme (BSPS), after being lured by an introducer firm called Celtic Wealth Management & Financial Planning.
FTAdviser understands from several sources that the firm has been present at several roadshows from the scheme trustees which are attended by members wanting more clarifications about their pensions, and proposing to them a flat fee of £1,500 on their DB transfers.
Celtic Wealth confirmed to FTAdviser that it is charging this fee, which is "the initial adviser charge".
However, the firm "is not authorised to provide advice and indeed it does not do so".
It said: "All regulated advice in relation to pensions and investments is given by Active Wealth (UK) Ltd. All clients introduced to Active Wealth are seen face to face by a fully regulated adviser of that firm.
“Celtic Wealth has been approached by members of the BSPS and for all clients it is made clear that all advice provided by Active Wealth is tailored to each individual client’s needs.”
Celtic Wealth said that its role is to act as an introducer, and it doesn’t, “in any way, influence the client’s decision to proceed with the transfer”.
It added: “The assessment of the client’s retirement needs and the development of an appropriate solution to meet those needs, as well as the delivery of all regulated advice, is entirely restricted to Active Wealth in its capacity as an authorised firm.
“Celtic, other than introducing BSPS members to Active Wealth to determine what might be in their best interests, is not ‘involved’ in transfer cases.”
The Financial Conduct Authority has told Active Wealth, in the meantime, to stop accepting any new clients on pension business.
A note on the FCA register entry for the firm also said that the company must not offer pension advice to existing clients unless that advice is signed off by an independent third-party.
Active Wealth must also write to current customers about the restrictions it is under and request permission to share information with any relevant third-party in this regard.
Darren Reynolds, chartered financial planner at Active Wealth, did not reply to requests for comment on any of these issues by press time.
As an introducer, Celtic Wealth is remunerated by the financial adviser firm for introductions, and this is usually a percentage of the initial adviser charge, which is standard practice in the market, the firm said.
"Generally, the adviser charge will be deducted from the pension fund if the transfer proceeds," it added.
Steve Carlson, a chartered financial planner at Cardiff-based Carlson Wealth Management who has taken some of the steelworkers in Wales as customers, told FTAdviser that £1,500 is a very low charge.
He said: “The average on the market is 2 or 3 per cent of the transfer value.
“If they’re only charging £1,500 for transferring a pension that could be worth £200,000, £300,000 or £400,000, it is very very cheap.”
Around 130,000 steelworkers 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).
From these, around 43,000 are deferred members, which means that transferring out their pension is also an option for them.
Transferring out is considered by the FCA to be a highly risky - and irreversible - decision, as it means the pension holder giving up a lifetime's worth of guaranteed income.
Several steelworkers have mentioned Celtic Wealth in a Facebook group with more than 4,000 members.
An individual said: “I used Celtic Wealth Management in Pontarddulais, Swansea, £1,500 flat fee with no extras, fund charge per annum is approx 0.3 - 0.4 per cent. Very polite and helpful but as always do your own research.”
Other members, however, are warning their colleagues to check the position carefully.
A steelworker said on a Facebook closed group seen by FTAdviser: "Lady’s [sic] and gents, if you are planning to use an IFA to invest your pension pot elsewhere, please do a good background check on the person or company.
“I have just checked out Celtic Wealth Management on Companies House, the gentleman that is registered as the owner is listed as a mortgage adviser, which in my opinion does not qualify him as a pension adviser."
He added: “Please, please check as it is your financial future that you are putting in their hands.”
Some of Mr Carlson clients have mentioned Celtic Wealth Management to him.
He said: “Apparently, a lot other people have been going to Celtic; but I don't know anything about them.”
Al Rush, principal at Rutland-based Echelon Wealthcare, revealed that some steelworkers’ pension pots are being invested by some financial advisers in esoteric and unregulated investments.
He said: “I spoke to somebody yesterday that has told me that he has been placed into a [self-invested personal pension] Sipp, and from a Sipp he has been placed into funds which I thought were completely and utterly unsuitable.
“They are funds that offer access to unregulated investments, and to offshore bonds, which is terrifying.”
There is no suggestion that these investments are being made through Active Wealth.
Mr Rush argued that the “steelworkers are in a dreadful position”.
He said: “They aren't financially sophisticated, they work in small teams, with a very close net community, and if two or three of their friends are invested in a company they might try it, but nobody understands the nature of the investments.
“This problem only occurred because Tata Steel and the trustees didn't get into place a decent counselling process for the steelworkers.
“They could have started months ago, and that would not be this last-minute panic.”
According to a spokesperson for the BSPS, the "trustees cannot legally advise individual members on what they should do with their pension".
However, "they have provided all members with clear information on the choices available to them and have directed them to sources of independent financial advice (such as unbiased.co.uk) should they need additional help".
The closure of the BSPS was first announced last December, with members approving the move in February.
The steelworkers have until 11 December to make a decision between the PPF and the new BSPS.
According to pensions expert and founder of Pension Playpen Henry Tapper, who has visited Port Talbot to speak to the British Steel pension scheme members, there is little evidence of financial advisers suggesting anything other than transfers to the individuals.
Due to concerns about this, the FCA 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.
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.
maria.espadinha@ft.com
