Your IndustryJan 19 2018

Carillion pension and data complaints: the week in news

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Carillion pension and data complaints: the week in news

For those of you who have been distracted by these issues, and I gather there's a lot of research material available on the latter, then it's time for the week in news.

1) Deja vu all over again

Just when you thought it was safe to go back into the news, with updates about British Steel dying down, along comes another defined benefit pension scheme to make you think twice.

After unsuccessful talks with its lenders and the UK government, on Monday construction company Carillion made an application to the High Court for compulsory liquidation. The accountancy firm PwC has been appointed as administrator.

The company, one of the UK government's biggest contractors, had 13 final salary schemes in the UK with more than 28,500 members, and a deficit of £587m at the end of July.

These will now enter the Pension Protection Fund, with the exact size of the impact on the PPF estimated to be well in excess of half a billion pounds.

Inevitably this has led to signs that scammers may be circling the company’s DB scheme members.

Pensions expert and founder of Pension Playpen, Henry Tapper, said adverts were already appearing on Google about final salary pension transfers that catered specifically for Carillion pension members.

Meanwhile tade union Prospect has warned Carillion pensioners might lose retirement payments following the government contractor's collapse, since these are not made through the company's pension funds.

2) Data-day complaints

Predictions from experts haven't gone very well in recent years, but that hasn't stopped chief ombudsman Caroline Wayman.

She appeared before the Treasury Select Committee this week and was asked to predict what she thought might be the next cause of a large number of complaints after payment protection insurance dies down.

Ms Wayman predicted the use of customer data would cause the next surge, saying the greater use of client data made it easier to access financial services but warned this also came with drawbacks.

She said: "There are quite a few areas of our work where you see the convenience versus security as a real inherent tension.

"Faster payments is something that, on the whole, people welcome and it is great that you are not waiting however many days for cheques to clear.

"It is great, mostly, that you can take out a loan very quickly through a few clicks on your phone but there is also with that greater convenience there is also the flip side of that, when things go wrong and the need to protect against things going wrong and how people use their data."

Ms Wayman also defended the Financial Ombudsman Service from the poor feedback given by its staff in a recent survey.

She acknowledged that staff at the Fos had been unhappy in recent months, but said this was because of the change taking place at the organisation.

3) Conflict of interest concerns

A housebuyer's agent this week questioned whether an estate agent with an in-house broker has a conflict of interest, after his client's deal fell through.

Buying agent Henry Pryor has criticised the estate agent Spicerhaart and broker partner Just Mortgages, suggesting his client's bid to buy a property might have been successful if his client had chosen to use the in-house brokerage of the selling agent rather than an independent adviser.

Spicerhaart has rebutted his concerns and defended its processes with Just Mortgages as entirely proper.

Mr Pryor said his client had an agreement in principle for a mortgage to buy a property being marketed by Spicerhaart, which he forwarded to the estate agent along with the client's name, address, solicitor, mortgage broker and confirmation of his status as a chain-free buyer.

The client had been offered a mortgage by Halifax through another broker which Mr Pryor had no commercial relationship with but at this point he was informed by the negotiator handling the sale that as buyers they would need to be "qualified" by Just Mortgages.

When Mr Pryor challenged this, he was told Just Mortgages was independent of Spicerhaart and that it checked all potential buyers on behalf of the estate agency to ensure their financial position.

He was also told that the broker firm might offer alternative funding which the buyer was not obliged to take up.

4) Got your number

St James's Place has warned that people might "get blindsided by a big number" when they get a cash equivalent transfer value (CETV) from their defined benefit (DB) scheme.

Ian Price, the divisional director for pensions and consultancy at SJP said clients shouldn't request pension transfer values before speaking to a financial adviser.

Following the introduction of pension freedoms in 2015, the volume of defined benefit pension transfers has been soaring, as savers seek to take advantage of sky-high transfer values and move their nest eggs into defined contribution schemes in order to access their cash.

Figures published by Mercer in April showed as much as £50bn has been pulled from final salary pension schemes in the past two years.

Mr Price said: "The first thing they should do is to talk to a financial adviser to see if a transfer is appropriate for their case."

5) Testing times

The Chartered Insurance Institute has been accused of trying to limit the study choices for their exams by introducing "all-inclusive packages".

When signing up to take a CII exam individuals now also get a study text and access to the CII's online study tool, RevisionMate.

Candidates can sign-up for the exam alone and not receive the study text only if they are taking a resit or if they already own the study text.

The CII has also made changes to its face-to-face support programme.

While some have said this limits choice for those seeking these qualifications, the CII has said the changes, which apply to award, certificate and diploma units, are a direct response to changing trends and preferences, with the vast majority preferring an inclusive package.

damian.fantato@ft.com