Keith Richards, chief executive of The Personal Finance Society (PFS), branded this type of what is commonly called 'factory gating' as unacceptable behaviour among the profession of financial advisers.
He said: "We will not defend any firm which has compromised professional standards because they saw this as a quick money-making opportunity."
Jonathan Watts-Lay, director of Wealth at Work, which provides financial education, guidance and advice in the workplace, revealed it has had clients "where certain locations of their companies effectively have been factory gated by localised IFAs".
He said: "We know that has happened, because when you look at the other locations, transfers run at a normal rate – and then you look at a specific location, transfer [numbers] are through the roof."
Mr Watts-Lay didn't reveal the name of the company targeted by advisers in this way, but he told FTAdviser it is a firm with a defined benefit scheme still open to accrual, which makes a decision to transfer out inappropriate for most people in the scheme.
Mr Watts-Lay and his team went to the location to give some seminars to the workers being targeted at the beginning of the year, after the pension transfer scandal with the British Steel Pension Scheme (BSPS) was already well known.
Plans for the pension scheme's owner Tata Steel to merge with rival ThyssenKrupp were waylaid until a deal could be reached to offload the Tata's liabilities to the British Steel pension scheme.
As a result, 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, to be moved to the lifeboat Pension Protection Fund.
The scheme has about 130,000 members of which 43,000 are deferred, meaning transferring out of their pension was an option for them.
FTAdviser reported in November that 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.
The firm, the first one to be stripped of its transfer permissions, has now entered into liquidation.
It is understood both of these firms targeted steelworkers in or around the site of their workplace, the Port Talbot steelworks.
The Financial Conduct Authority (FCA) doesn't have any specific guidance on factory gating.
But central to its regulation of the sector is the principle that 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.
The Personal Finance Society's Mr Richards argued people should be careful to avoid 'factory gating' becoming a common parlance label alongside 'ambulance chasing'.
He said: "However, that is not to say the principle doesn't deserve scrutiny amid concern over potentially unsuitable advice given to savers cashing in final salary pensions."
Mr Richards quoted the recent figures on pension transfers from HM Revenue & Customs, which show that flexible withdrawals from retirement have grown to a total of £17.5bn since pension freedoms was introduced.
He also noted that recent research published by the International Longevity Centre and Royal London showed that those who receive financial advice are on average £40,000 better off than those who don't.
He said: "So the demand and benefits are plain to see, but over-commercial activities can distort the true picture and erode public confidence and trust in the advice profession.
"However, whilst we should not confuse genuine marketing activities with factory gate examples of late, the sector needs to be extra vigilant at a time of high visibility and focus by government and regulators."
Alistair Rush, principal at Rutland-based Echelon Wealthcare, and one of the financial advisers that was involved in a free counselling campaign for steelworkers, said it may be the case advisers are getting around the rules by using introducer firms.
He said: "But there isn't anything stopping them of doing it. If your financial promotion regulations are being satisfied, then you are covered. The issue is if whether is the sort of practice that advisers should be doing.
"Targeting people [by factory gating] is different from a general promotion, which is done far more broadly.
"With this, you are focusing on people who you know potentially are going to be in a frame of mind that makes them more vulnerable, so I do think that you have far more responsibilities."
maria.espadinha@ft.com
