Letters: It's comforting to see regulator is punishing unethical and poor practice

FCA not stopping the bad guys

Regarding your article ‘Contingent charging ban sees DB transfers hit record low’(Oct 14).

I am not surprised the numbers of transfers in September was lower, but I don’t think it’s the impact of the contingent charging ban.  

That only applies to cases where the advice process starts after October 1, so cases undertaken in September were not impacted. It will filter through to the actual transfer in some months’ time. 

Transfers take months to advise and process. Not least because the pension consultants providing the data to paraplanners like myself and the advisers we work with are slow to respond and refuse to provide full scheme information.  

Also, gathering all the client data and undertaking the analysis is a long and complex process – it should be, it’s an important and life-changing decision.

The reason fewer pension transfers are being undertaken is because firms that were advising on pension transfers could not renew their professional indemnity cover.  

The advisers still have clients who need the advice, but they can’t provide it. That means they cannot organise a transfer, but it also means they can’t tell a client that a transfer is not the right advice.

The regulator is not stopping the bad guys. They will continue to undertake transfers and scam scheme members.  

They don’t care about PI insurance cover or regulatory reporting or calls for information; they are working outside the rules.

Heather Dunne 

The Pensions Experts

Dealing with Sipps

Regarding your article ‘Adviser lands at FSCS with claims worth thousands of pounds’ (Oct 14).

Please allow me to contextualise the comments attributed to me in your article.

The comments were made in a broader interview regarding the evolution of the self-invested personal pensions market. 

My choice of a timeline of 2012 was linked to the publication of the Financial Services Authority’s second thematic review of Sipp operators, which was the first occasion that the FSA had suggested there was any requirement of a Sipp operator to undertake investment due diligence. 

Many of the legacy issues that have plagued the Sipp market and given rise to countless claims on FSCS arose prior to the publication of this review.

The Financial Conduct Authority could have acknowledged that their predecessor – the FSA – had failed to engage with the industry during the early years of Sipp regulation and that clear guidance was lacking. 

Instead, they have chosen to interpret Conduct of Business Sourcebook rules as applying in a way which was certainly not the understanding of the Sipp industry at the time. 

The recent Carey Pensions judgment addressed some of the consequences of this approach, but we now have to await an appeal to discover the extent of a Sipp operator’s responsibilities during those early years. 

In the meantime, more claims will be lodged and the drain on the FSCS will continue.  

My comments were simply asking for an honest admission that the regulatory framework was unclear and that it was unreasonable to have expected Sipp operators at the time to second guess the application of rules, which were vague at best – a view supported by several Pensions Ombudsman’s determinations. 

I suggest it is unreasonable for the industry – not just Sipp operators – to be asked to pick up the ‘tab’ for historic omissions and neglect by the regulator that spanned nearly six years.

John Moret

More To Sipps

Adviser treatment

Following your article ‘Govt U-turns on fees disclosure in 2-page pension statements’(Oct 19). 

Advisers have to disclose all costs – but not insurance companies/pension providers.

It should be very simple for them to do this. They just don’t want anyone seeing how much they are charging, and what they are actually doing to justify the cost. 

Colin Tanner

Tanner Financial Advice

Put client outcomes first

Regarding your article ‘Sipp charges cost adviser’.

It is comforting to see that the regulator is at last punishing the unethical and poor practice being pursued by adviser firms who put their own fund management preferences and growth objectives before the best interests of clients. 

I have for many years seen higher charge general Sipps as a cause for concern and I have never used these products unless it can be shown that the overall range of available funds gives a much better outcome for a client than using a more restricted range of internal funds.

Or, if a client actively wishes to hold direct shares or assets that are not generally available under an insured proposition, even then, it must be demonstrated that the additional risk and potential growth achieved gives a better result for the client.

Sadly, with the mediocre returns generally achieved by managed portfolios and standard discretionary fund management propositions in recent years, the substantial additional cost involved is rarely worth the additional cost, especially when markets are flat and where the alternative of a bespoke adviser proposition making use of an alternative low-cost platform wrap facility is available, which is my preferred alternative.

As such I have little sympathy for advisers that churn client assets and move assets to suit their own investment propositions rather than acting in the best interest of their clients. I would encourage the regulatory bodies to continue to punish firms that put themselves first before their clients.

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