The Financial Conduct Authority’s chief executive and chairman have defended the regulator in its handling of the British Steel Pension Scheme scandal and confirmed it would be writing to all 7,700 members again.
In June 2020, the regulator wrote to members of BSPS asking them to revisit the advice they received and complain if they have concerns.
However, in a Treasury Committee session yesterday (May 12) with the FCA to discuss its ongoing work, MP Nick Smith questioned the regulator on why it is taking so long to implement action against BSPS firms.
Smith interrogated the regulator asking why the watchdog only wrote to members last year, its handling of phoenixing and raised queries about its handling of BSPS overall.
Chief executive Nikhil Rathi said: “We certainly understand the distress that you describe in this situation, the many consumers who are impacted by this were vulnerable consumers. They have been advised to take decisions which on review, looks like it was unsuitable advice and was not in their best interests.
“The whole issue of what is suitable advice has to be looked at on a case by case basis, and a defined benefit pension transfer advice is a very complex piece of advice, and therefore those who are seeking to challenge the decisions as they perform some action against them, will throw quite complex analysis which by law, we have to evaluate before we take any action against them.”
Both Rathi and chairman Charles Randell shifted the blame as they argued pension freedom legislation had permitted defined benefit pension transfers and the consultations at the time had created an alternative scheme, BSPS II - stating these specific situations were the origin of the scandal.
He added: “The FCA wrote in June of 2020 to all members who have transferred and advised them that they may have grounds on which they can complain against their adviser and the different mechanisms which they can use.
“We will write again to everybody. And certainly as the public health situation improves and allows it, we certainly want to have people on the ground as well, engaging in community meetings so that we can discuss these options, face to face obviously in the last year that has not been feasible.
'We hope that will help to some extent, address the issues but we are dealing with quite a complex situation, not least because a number of the firms who were advising now have now gone bust or now left the markets, in one way or another.”
When asked about whether an inquiry into the regulator’s handling of BSPS should happen, Randell shifted back to the case of the pension freedoms policy.
“I think it's really important to identify what the root cause of the problem is in the BSPS case and how we can prevent similar problems in other cases.
"The policy of pension freedoms was one decided by Parliament, and it presented people with incredibly complex decisions.