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.
"Frankly, I think it was a policy that was designed by people and it was implemented very quickly, but it gave rise to a problem which could only be solved with coordination between a large number of organisations, employers, pension trustees, the Pensions Regulator, the FCA, the Money and Pensions Service.
"I think Caroline Brooks's report did highlight that the cooperation around the British Steel pension scheme was not what it should have been.”
He stated that the regulator was holding regular meetings with the chairman of the Pensions Regulator and doing “what I can” to prevent future cases like this.
“We're also working on a strong nudge policy so that firms signpost Pension Wise guidance for any consumer thinking of transferring and I really welcome the changes to the law that will enable trustees to refuse pension transfers in some cases,” he added.
“I think the lessons, very painful as they are, have been learned. We are very determined to bring enforcement cases to the speediest conclusion we can and we are determined to crack down on phoenixing, which is why Nikhil has added to his management team by appointing an executive director for authorisations to make us as good as we can be in this area.”
But earlier this year, the chairman of the Work and Pensions select committee said financial services rules were "nowhere near" what is needed to prevent another British Steel debacle.
sonia.rach@ft.com
