Defined BenefitFeb 15 2018

MPs find advisers 'shamelessly bamboozled’ steelworkers

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MPs find advisers 'shamelessly bamboozled’ steelworkers
ByMaria Espadinha

“Our financial services regulator has been rejigged and rebranded but I can’t see much evidence of it working better for the people it is meant to protect: individuals making life-changing financial decisions.”

An FCA spokesperson argued that the regulator agrees with the committee that DB transfers “are a very important issue”.

She said: “We believe the committee’s recommendations are sensible. We are currently looking at the register to see how we can make it easier to use. We are also reviewing the rules that apply to firms advising on pension transfers, and will consider this report as part of this.”

Several financial advice firms have stopped providing DB transfer services in connection with the British Steel case after FCA’s intervention, with County Capital Wealth Management, also trading as Pension Review Service, being the latest to join the list.

At the end of last month, the FCA announced it will be collecting data from all financial advice firms which hold pension transfer permissions during this year.

In October, the FCA revealed that advice in more than half of the DB pension transfers where the recommendation was to move the retirement pot was unsuitable or unclear.

Mr Field also commented on The Pensions Regulator role in the process.

He said: “Once again we find TPR fiddling while Rome burns, when it should have seen this rip-off coming.

“Given a choice between two DB options worse that what they had been promised, with precious little support in making that choice, many steelworkers were drawn to the superficially attractive third option.”

“This is the first deal like this, but there will be more. All the responsible authorities must act, now, to stop more people being cheated. We will be asking all those involved to report back to us on the changes they will make, promptly, to stop this happening again.”

The committee is calling on the pensions watchdog to conduct a review of its practices, “listening to BSPS members and learning the lessons of how they were let down”.

MPs are also asking the regulator to “ensure all schemes in future are equipped to give members of full picture of the options they are choosing between”.

Thousands of steelworkers were forced to make a decision about their financial future without vital information, FTAdviser reported in October.

In response to the report, TPR said that it fulfilled its primary role by evaluating and approving a complex restructuring of the BSPS including obtaining £550m for the scheme. This was done through a regulated apportionment arrangement (RAA).

A TPR spokesperson said: “As part of this rare restructuring, which prevented the company becoming insolvent, a new pension scheme was offered to members as an alternative to entry to the PPF.