Darren Reynolds, director of Active Wealth, revealed the details in a letter sent to Labour MP Frank Field, chair of the Work and Pensions select committee.
Mr Reynolds said: “Active Wealth advised approximately 300 BSPS clients, of which 64 proceeded to transfer out of the BSPS into an alternative pension arrangement.
“In all cases, clients were advised that if their primary aim was to maximise a guaranteed income in retirement, then their interests would be best served by remaining in a final salary pension scheme, such as the BSPS.”
Some of these clients saw their pension pots being invested in self-invested personal pension (Sipp) providers, such as Momentum Pensions, and managed by Gallium Fund Solutions, a Kent-based discretionary investment manager, which charge exit fees.
Around 130,000 steelworkers had to choose to move their DB pension pots to a new plan being created, BSPS II, or stay in the current fund, which would be moved to the Pension Protection Fund (PPF), by 22 December.
Of the total members, 43,000 were deferred, which meant transferring out their pension was also an option for them.
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.
Mr Reynolds revealed that none of the BSPS clients “have signed up to receive an ongoing advisory service and they have not therefore committed to paying any ongoing adviser charges”.
He said: “Active Wealth’s practice has been to get in touch with its clients two years after they initially became a client of the company and, at that stage, to determine whether they wished to engage Active to provide an ongoing advisory service.
“They would, of course, be provided with details of the cost of the service at that stage as part of the facts they needed in order to make a properly informed decision.”
Financial advisers are divided over whether transferring clients in such one-off deals without providing some form of ongoing advice is good practice.
Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, argued that “although ongoing advice is highly recommended in such cases, it is a separate service and should not be mandatory”.
He said: “As long as the advice to transfer was suitable and meets the clients’ objectives then I don’t see there being a problem post-transfer if no ongoing advice is selected or agreed. Ultimately you cannot force anyone to take up a service they don’t want and don’t need.
“I would be more concerned if every client was forced down the route of taking up ongoing advice as a result of the transfer, which I’ve seen a number of firms insist on, otherwise they will not proceed with the initial advice. I would not consider this to be a client-centric proposition.”
For Alistair Cunningham, financial planning director at Wingate Financial Planning, “most people should not have transferred out of the BSPS, and those that did should really be in such a unique set of circumstances that ongoing advice is likely to be needed”.
Mike Lacey, partner at Berkshire-based financial adviser firm Bowman Pension Consulting, argued that a decision from the client not to take ongoing advice “puts advisers in an extremely awkward position”.
He said: “It has to be of concern when no transfer clients want to pay for post transfer advice. The likely sums involved mean that there is, obviously, a great deal at risk and with pension freedoms, the sheer volume of choice facing these clients is vast.
“To make the wrong decision could have a catastrophic impact on those clients and their dependents.”
“Obviously, you can’t force people to pay for a service, and the service should not be free,” Mr Lacey added.
However, he said that he “would be very uncomfortable with clients declining post transfer guidance and support” and that he would make his concerns very clear.
Martin Bamford, chartered financial planner for Surrey-based Informed Choice, argued that it is “important to give clients the option of an ongoing advice service at the start of the relationship”.
He said: “Not every client will want to pay for ongoing advice, and advisers should only be paid when they deliver an ongoing service.
"But I would be very nervous about only giving upfront advice, with an intention to offer an ongoing advice or review after two years.”
Mr Bamford added that he has a structured ongoing advice service with all the clients he works with.
He said: “This is just as important, arguably even more important, than the advice we deliver up front.”
The Work & Pensions select committee, which held hearings with steelworkers, financial advisers and regulators amid concerns about the financial advice being given to the members, will publish a specific report on this case early this year.
Following intervention from the Financial Conduct Authority (FCA), nine firms have decided to stop providing advice on pension transfers.
In the meantime, the regulator revealed that will be collecting data from all financial advice firms which hold pension transfer permissions during this year.
maria.espadinha@ft.com
