British Steel  

BSPS report paints 'damning picture of FCA', say advisers

BSPS report paints 'damning picture of FCA', say advisers

Advisers have backed the Public Accounts Committee’s report on the Financial Conduct Authority's handling of the British Steel Pension Scheme transfer scandal, saying it paints a "damning picture' of the regulator.

A report into the handling of the BSPS saga by the Pac, published today (July 21), looked at how the regulator handled the issue, the proposed redress scheme and how prepared the Financial Conduct Authority is for future risks.

The committee found that the FCA had “inadequate oversight" of firms involved in the BSPS scandal and was “consistently behind the curve” when responding to the issue.

Echelon Wealthcare principal Al Rush said the Pac report is “most impressive in scope”.

Rush said the report refers to the actions of the FCA, Financial Services Compensation Scheme and Financial Ombudsman Service in the periods before, during and after the BSPS scandal broke.

“Although it doesn’t actually refer to the FCA as dysfunctional, it may as well have,” he said. “Fearful of acting, slow to act, poor decision making, a lack of leadership, unfit for purpose, the litany goes on.  Which is a shame, because there are many very good people at the FCA.   

“The problem is more the culture and the organisation, and the fact that within the FCA exist fiefdoms, career agendas and all manner of conflicts that exist within any big organisation.”  

As part of the recommendations made, the Pac said the FCA should provide the committee with an update on the extent and impact of unsuitable advice on BSPS members and what it has done to prevent a similar case from occurring again.

In particular, it has asked for changes to its approach to regulating small advice firms. 

After identifying problems with the advice market in 2015, the committee said the FCA failed to take effective preventative action and has been slow to implement its regulatory powers including a ban on contingent charging and temporary asset retention restrictions.

It recommended the FCA examine what can be done to improve the data and insight that they need to inform a more proactive approach to regulation, and what lessons can be learnt from its response to the Covid-19 pandemic. 

Philip J Milton & Company chartered financial planner Felix Milton, said: “The report paints a very damning picture of the FCA and its current oversight and I welcome the recommendations made by the committee. 

“Of particular note, I am glad to see that there has been comment on the fact that many consumers use the unnecessary and expensive claims management companies to assist with their complaints, often losing large amounts of their compensation in the process. The FCA must ensure a scenario like the British Steel members have suffered does not happen again.”

FTAdviser understands the pension freedoms were introduced very quickly in 2015 which meant the operational infrastructure that needed to be in place to support them was not available.

For example, data on the number of BSPS transfer requests were held by the scheme trustees and was not provided to the FCA.