St. James’s Place and Tideway have been accused of ‘factory gating’ practices, even after widespread condemnation of those who targeted British Steel workers in this way.
In a submission to the Work and Pensions committee about the support unions give to their members on pension transfers, Tim Sharp, policy officer at Trades Union Congress (TUC), revealed the two financial advice firms have been approaching scheme members.
He claimed during the consultation process for closing British Airways New Airways Pension Scheme (NAPS) to future accrual last year, “St. James’s Place IFAs were very active in trying to promote cash equivalent transfer values (although this was not promoted by the employer),” according to reports from the British Airline Pilots' Association (BALPA).
According to Mr Sharp, Prospect union also reported that “Tideway has been proactively contacting workers at EdF and Magnox,” and that this “was never done at the invitation of the employer”.
James Baxter, managing partner of Tideway, denied that the firm is involved in practices of ‘factory gating’, where advisers make efforts to recruit new clients by turning up unsolicited at their place of work.
“We have never contacted any member of any scheme directly. All contacts we received are based on referrals, or from members approaching us who have researched DB transfers online" he said.
The firm conducted free seminars in the area that were open to the public, he added.
Mr Baxter argued that the average transfer value for EdF members that have transferred with Tideway have been around £1m, and that a pension transfer "has put those members in a materially better situation”.
'Factory gating’ came to light during the British Steel Pension Scheme (BSPS) transfer scandal, where promoters working on behalf of financial advice firms approach scheme members in person.
Steelworkers were given 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, to be moved to the lifeboat Pension Protection Fund.
The scheme has about 130,000 members of which 43,000 are deferred, meaning transferring out of their pension was 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.
The firm, the first one to be stripped of its transfer permissions, has now entered into liquidation.
FTAdviser reported in May that advisers who look for pension transfer business outside workplaces risk breaching the Financial Conduct Authority (FCA) rules, as more cases of the practice come to light.
Mr Sharp revealed that trade unions receive large number of calls from members regarding pension transfers.
He said: Their experience is that members appreciate the ability to have a conversation devoid of pension industry jargon with an organisation they might trust more than an employer or financial adviser.