The National Audit Office is contacting advisers and other stakeholders to better understand what happened as part of the British Steel Pension Scheme debacle to inform its probe into the regulator’s involvement.
In a letter sent to Al Rush, principal of Echelon Wealthcare, seen by FTAdviser, the NAO said it was focusing on the Financial Conduct Authority’s regulation of defined benefit transfer advice and the provision of redress to steelworkers.
The parliamentary spending watchdog said it is speaking to a range of stakeholders to inform its understanding of the subject and asked whether Rush would be interested in providing his perspective.
In particular it wants to discuss the adviser's views on what happened in the BSPS case and his role in Operation Chive - Counselling, Help, Information, Volunteer Exchange – Which Rush created to provide free counselling to steelworkers.
The NAO also wants to hear about the FCA’s regulatory response, how redress has been delivered to steelworkers and the wider implications of the BSPS case on the DB transfer advice market.
Rush told FTAdviser the reference to redress was “particularly interesting” as it showed the NAO was not just taking a retrospective look and it could then bring in the Financial Services Compensation Scheme and the Financial Ombudsman Service.
The NAO is looking to speak with people in the next few weeks.
The body announced its investigation into the FCA’s work on BSPS last month (October 20), which is scheduled for Spring 2022.
There have been calls from the industry and MPs for the regulator to launch a consumer redress scheme, similar to the one set up for Arch Cru victims in 2012, which would compensate steelworkers for the unsuitable advice they received to transfer out of their pension scheme.
The FCA's board said at a meeting in July discussions were held around the available options for securing redress for scheme members. But it concluded it did not have sufficient information to make a decision on a broad brush redress scheme at the time.
Earlier this month, the FCA told FTAdviser “whether or not we undertake a redress scheme is under review and analysis”.
Latest figures from the FSCS showed it has paid out £21.5m in total so far to members of BSPS who were wrongly advised to transfer their defined benefit pensions.
The BSPS case
Three years ago British Steel Pension Scheme members were asked to decide whether to move their DB pension to a new plan, BSPS2, or stay in the existing fund, which was then moved to the PPF as part of a restructuring of pension liabilities, or to transfer out altogether.
As a result about 8,000 members transferred out of the old scheme, with transfers collectively worth about £2.8bn.
But concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA that resulted in a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.
The saga prompted a crackdown on DB transfer advice.
The regulator said DB advice firm numbers have shrunk from 3,000 in 2018 to 1,200 now.
amy.austin@ft.com
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