The government has pledged to keep "factory gating" under review but stopped short of cracking down on this practice which was criticised by financial advisers.
In yesterday’s consultation response to the cold calling ban, HM Treasury noted a few respondents raised the issue of in-person introducers "where lead generators meet prospective clients in person and introduce them to unscrupulous financial advisers".
It said: "Whilst not within scope of the regulations to ban pensions cold calling, the government recognises that this is an important issue and is in active discussions with the Financial Conduct Authority (FCA) to keep it under review."
Martin Bamford, a chartered financial planner and managing director for Surrey-based Informed Choice, said the government should "absolutely take a firmer stance" on this matter.
He said: "Factory gating exposes vulnerable consumers to unregulated individuals who should play absolutely no role in the regulated advice process.
"Some of the stories coming out of the British Steel Pension Scheme (BSPS) fiasco suggests unregulated introducers were regularly crossing the line to provide advice, with no recourse for investors when things inevitably went wrong.
"It’s time we leave financial advice to the professionals and shut the gate on these unregulated introducers for good."
Factory gating came to light during the BSPS transfer scandal when promoters working on behalf of financial advice firms approached 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 and be moved to the Pension Protection Fund lifeboat.
The scheme had about 130,000 members of which 43,000 are deferred, meaning transferring out of their pension was an option for them.
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.
Active Wealth, the first firm to be stripped of its transfer permissions, has now entered liquidation.
It is understood both of these firms targeted steelworkers in or around the site of their workplace, the Port Talbot steelworks.
Andrew Boyt, pension transfer specialist and freelance consultant, said the cold calling ban was an excellent outcome but it only "scratches the surface" of this issue.
He said: "The debacle at British Steel was not primarily created by cold calling, it was the ‘person to person’ introductions and so called factory gating which did the bulk of the damage.
"The legendary ‘sausage and chips’ events were arranged mainly by word of mouth and some paid ‘insiders’."
Mr Boyt argued that it is this practice that "needs to be addressed".
He said: "IFAs should already have formal agreements in place with all introducers and are also required to carry out due diligence on them.
"I’d like to see any remunerated introducer (as opposed to existing clients or friends recommending their adviser) meet the FCA’s fit and proper requirements."
The regulator doesn't have any specific guidance on factory gating.
But it expects financial advice firms to act "honestly, fairly and professionally in accordance with the best interests of its client", according to its Conduct of Business sourcebook (COBS) principles.
Darren Cooke, chartered financial planner at Red Circle Financial Planning, who launched the original petition that led to the cold calling, said factory gating practices still existed "but is thankfully much less prevalent than cold calling".
He said: "In that regard, I think it is appropriate to take a measured approach to it particularly as it would be even harder to enforce a ban.
"As we know all too well, the FCA can and should take far more action to protect the public from unscrupulous advisers and scammers than it currently does."
maria.espadinha@ft.com
