The MP for Blaenau Gwent in South Wales has called for the director of one of the advice firms at the centre of the British Steel debacle to be "properly held to account".
Speaking in the House of Commons yesterday afternoon (October 30) during the Budget debate, Labour MP Nick Smith said steelworkers had been let down by the financial services sector and named Active Wealth and its director, Darren Reynolds, as being "most closely identified" with the "scandal".
Mr Smith said the Financial Services Compensation Scheme was paying out more than £500,000 for claims relating to Active Wealth alone but 162 claims, many from steelworkers, were still open.
Last year Mr Reynolds was invited to give evidence to the Work & Pensions select committee but he did not show up.
His company was restricted from advising on pension transfers by the Financial Conduct Authority and is now in liquidation.
Mr Smith said: "But despite this, Darren Reynolds is still listed as an active person on the FCA register. From my inquiries he does not appear to have been referred for a more serious investigation.
"What needs to be done for this sector to tackle this bad behaviour and for this character to be properly held to account?
"The pensions debacle that hit steelworkers last winter should never have happened. It is a stark warning that regulating these businesses is not working well enough. It happened because we have a system of pensions and financial regulation that fails to protect hard-working people."
Mr Smith said the FCA and The Pensions Regulator were now working more closely together, but he said this was not a problem of coordination alone and called for stricter penalties, better information and tighter oversight.
He added that while the FCA had made improvements to its register recently but he said it was still not giving people "critical information" in a "straight forward enough way".
Mr Smith added: "The most pressing problem remains the sorry state of financial regulation and pensions oversight."
Back in July, the Financial Conduct Authority (FCA) revealed it flagged 26 financial advice firms involved in the British Steel pension transfer debacle as having a “high risk model,” an official at the regulator has said.
Speaking at The Great Pensions Debate in Port Talbot, the FCA's technical pension specialist Chris Hewitt said the regulator identified two factors in determining whether a firm was high risk, including "a high conversion rate, where the adviser is recommending a transfer to the vast majority of clients," and "a high proportion of insistent clients".
As a result of identifying the 26 firms, the watchdog then visited 14 firms and conducted a further 12 desk based reviews.
Mr Hewitt said: "We reviewed 172 files across those, from which 34 per cent were unsuitable, and 10 per cent failed to demonstrate suitability.
"As a result, 13 firms stopped advising on DB transfers."
damian.fantato@ft.com
