Due to spurious actions of a few unregulated introducer firms involved in the British Steel Pension Scheme (BSPS) case, all pension transfers will now come under scrutiny, the Personal Finance Society (PFS) has warned.
Responding to the Work & Pensions select committee report on BSPS, which concluded many steelworkers were "shamelessly bamboozled" by financial advisers, Personal Finance Society chief executive Keith Richards argued MPs shouldn't ignore that thousands of BSPS members "were forced into making unqualified and very emotional decisions within a completely unreasonable deadline".
Around 130,000 steelworkers had to choose to move their defined benefit (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 Richards said: "Regrettably, due to the spurious actions of a few unregulated introducer firms, we are now seeing the blame and responsibility being disproportionately placed upon the advice sector - which is not in the public's best interest.
"Sadly, all British Steel pension scheme transfers will now come under scrutiny and genuine advisers will also fall under suspicion of doing the wrong thing.
"As a result, there is a growing risk of wider implications for any DB transfer."
Since March and until the beginning of February, BSPS has processed 2,600 pension transfers equating to a total value of £1.1bn, according to data revealed by the scheme trustees.
Mr Richards argued that "poor practice and over-commercial activity will always be unacceptable, and there is no defence for any firm which has compromised professional standards because they saw the pension reforms as a quick money-making opportunity".
He added: "But spare a thought for the majority of genuine advisers who are being unfairly implicated in this mess and who themselves may now become victims of the fiasco.
"There should be little doubt that we are all in this together, yet the greater degree of responsibility sits with the scheme trustees, the employer and indeed The Pensions Regulator, who appear to have mismanaged the matter from the outset."
Several financial advice firms have stopped providing DB transfer services in connection with the British Steel case after intervention from the Financial Conduct Authority (FCA), with County Capital Wealth Management, also trading as Pension Review Service, being the latest to join the list.
Mr Richards argued that the requirement introduced with pension freedoms – where savers with DB pensions greater than £30,000 need to get financial advice – has put workers and the advice sector "in an untenable scenario".
He said: "The government must shoulder a share of the responsibility for introducing pension freedoms (including DB schemes), without consulting the market, its regulators, or indeed anyone.
"It is extremely disappointing that the authorities and the government are not taking a more responsible role and accepting their fair share of accountability for what many warned would happen."
maria.espadinha@ft.com
