May pledges Treasury action on rogue advisers

May pledges Treasury action on rogue advisers

Prime minister Theresa May has vowed to ensure that HM Treasury and the Financial Conduct Authority (FCA) will work together to crack down on rogue financial advisers.

Speaking in Parliament today (December 5), Mrs May was answering a question from Nick Smith, MP for Blaenau Gwent in South Wales, about the British Steel pension transfer debacle, when she said more action would be taken to curb the issue.

Mr Smith had told Mrs May: "One of my constituents has lost thousands of pounds from his British Steel pension, as he was preyed upon by a rogue financial adviser. It has happened to hundreds of others across the country.

"The FCA doesn’t have the teeth to sort this out. I think ripping off pensioners is criminal. Does the prime minister agree?"

Mrs May replied: "I’m very sorry to hear about the case of his constituent in relation to his pension and the actions of that financial adviser.

"I will ensure that the Treasury looks at this issue with the FCA in these sorts of cases."

Mrs May was referring to financial advisers who preyed on people to arrange transfers out of their valuable defined benefit pensions, despite it not being in their best interest.

The government has already pledged to crack down on other rogues such as reckless directors who phoenix their firms, by giving new powers to the Insolvency Service.

Alistair Cunningham, chartered financial planner at Wingate Financial Planning, said it was clearly within the prime minister's power "to launch inquiries, direct redress and more".

"But I don't get too much comfort from her comments today," he added.

Mr Smith was referring to advice firm Active Wealth, which entered liquidation in February.

FTAdviser had reported last year that several steelworkers appeared to be transferring out their pensions after being lured by cheap deals from unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to the advice firm.

Active Wealth was one of 10 firms which stopped giving transfer advice at the behest of the regulator after they were identified as key players advising members of the British Steel Pension Scheme.

Meanwhile, in an update given last month, the Financial Services Compensation Scheme (FSCS) said it had completed assessments of 14 claims against Active Wealth from BSPS, with total compensation paid so far of more than £285,000.

However, the scheme is considering making changes to the way it is calculating the compensation to these steelworkers, including the discount rate used.

Nevertheless the maximum the scheme can currently pay out on such claims is £50,000.