A financial adviser working with members of the troubled British Steel pension scheme has criticised attacks in the media on those helping steelworkers transfer out of their lucrative defined benefit pensions.
Mark Abley, managing director of the Durham-based Pension Review Service, argues there is a "trial by social media being conducted" on financial advisers involved in the British Steel Pension Scheme (BSPS) case.
Mr Abley, whose firm has pension transfer permissions granted by the Financial Conduct Authority (FCA) and has been a pension transfer specialist for over a decade, has been advising steelworkers on their retirement decisions, including on pension transfers.
Steelworkers have until 22 December to decide whether to move their defined benefit (DB) 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).
The failed scheme has about 130,000 members of which 43,000 are deferred, which means transferring out of their pension is an option for them.
But transfers out of a defined benefit pension scheme mean giving up benefits like a guaranteed income based on earnings for life, and are considered a high-risk recommendation for both advisers and clients.
High-transfer values and the attraction of being able to access a lump sum of retirement savings make them attractive, however.
FTAdviser reported in November that several steelworkers appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.
More than a hundred of complaints have already landed with the Pensions Ombudsman about the scheme.
Concerns about the financial advice being given to steelworkers have triggered action from the regulators.
The FCA, The Pensions Regulator (TPR) and The Pensions Advisory Service (Tpas) will be holding a public meeting in Port Talbot on Thursday (14 December) for BSPS members.
But Mr Abley criticised what he calls "some apparent final salary transfer 'experts'," who "recently visited Port Talbot and concluded that [pretty much] all of the advice that had been given" to the steelworkers was poor.
He said: "While it has emerged that some members of the financial advice community had the interests of their own company’s bank balance at heart, rather than the workers they are supposed to be advising, the upshot is that issues are being confused - and people who are not qualified to comment are being listened to."
Pensions expert and founder of Pension Playpen Henry Tapper, and Al Rush, principal at Rutland-based Echelon Wealthcare, visited the Welsh city to speak to the steelworkers, and found little evidence of financial advisers suggesting anything other than transfers to the individuals.
As far as Mr Abley can establish, "these experts spoke to only a handful of people to arrive at this conclusion", he said.
"They criticised the use of mainstream companies like Prudential, Royal London and Zurich.
"They warned everyone who would listen about visiting advisers from other parts of the country, labelling them wolves/vultures/sharks/criminals and such like.
"This, without knowing anything about these firms, their processes or actually being qualified to comment," he said.
Since September, Mr Abley’s firm has been contacted by more than 300 steelworkers for advice.
Until 24 November, Pension Review Service has given advice to 51 cases – 27 in which the recommendation was to proceed with a pension transfer, and five not to proceed.
The remaining clients are still waiting for their cash equivalent transfer values (CETV) from the scheme’s trustees, he added.
Pension Review Service charges a fee around 2 to 3 per cent of the transfer value on a contingent fee basis.
If the customer doesn't want to sign up as a client of a firm, this percentage will double, Mr Abley explained.
Mr Abley also noted that if Mr Tapper and Mr Rush have evidence of malpractice the proper place for it "is with the FCA and not Twitter".
He said: "The really interesting thing is that these self-appointed experts do not appear to be qualified to comment.
"Despite this they have systematically attempted to disrupt the advice market and bring the advice process into disrepute."
In reply to Mr Abley’s accusations, Mr Tapper said he had "sympathy for advisers whose good advice is questioned".
He said: "But bad advice can wreck lives and must be stopped.
"The cream will rise to the top and South Wales advisers will be the stronger for seeing the back of rogues who could have done lasting damage to the reputation of financial advisers locally and nationally," he said.
Mr Rush classified Mr Abley’s claims as "nonsense".
He said that he has spoken to around 60 steelworkers since he started to accompany this case.
"The problem is that there hasn’t been any decisive intervention from the regulator," he concluded.
maria.espadinha@ft.com
