The UK regulator fought back hard this week against a suggestion by the chair of the Committee for Works and Pensions that it was was “grossly inadequate” and running the risk of “sleepwalking into yet another huge mis-selling scandal”.
As International Investment reported, the comments by MP for Birkenhead Frank Field, pictured left, came in response to the news that one of the firms accused of giving poor advice to British Steel pensioners following its takeover by Tata Steel.
Now Andrew Bailey, chief executive of the Financial Conduct Authority (FCA) has written to Field to deliver a strongly worded rebuke and a robust defence of his organisation’s record in protecting the interests of consumers, especially victims of mis-selling and “scams”.
“I was concerned when I saw the cover email from committee staff that went to the media which I felt showed a flippant attitude to these issues, given the seriousness of the allegations the committee was making,” said Bailey.
He was particularly aggrieved that the committee had given a copy of its letter to the FCA to the media half an hour before the FCA had even received it, not giving the FCA a fair opportunity to respond, he said.
He added: “I am concerned the committee’s conclusion does not show the full scale of the work we are doing, nor does it factor in the role of other organisations in what is a coordinated exercise.”
The firm that prompted Field’s angry comments is Active Wealth, which voluntarily stopped offering pension transfer advice after being the subject of FCA attention since August 2016.
That was when the FCA wrote to the firm to demand a summary of the advice that the firm ws giving to prospective clients, details of its sales procedures and monitoring arrangements with regard to pension transfers and/or switches, “including a flowchart of the whole advisory process”.
It also requested six client files.
In January 2017, it wrote again to request a further six client files and the same details as before, this time specifically with regard to transfer into SIPPS.
It followed that in February to ask for further details relating to those six clients, including details of underlying investments, who had chosen the funds invested in and asked for copies of advice given to those clients.
Then in July the FCA visited Active Wealth’s offices, after which Active Wealth announced that it would no longer be recommending any non-standard assets to clients.
In December 2017, the Committee for Work and Pensions called for Active Wealth to appear before it to give evidence, but Reynolds chose not to attend.
‘Inadequate’ response times
With regard to the length of time that the FCA was apparently investigating Active Wealth, Field said, “I have already described the FCA’s action on BSPS as grossly inadequate, and these responses do nothing to increase my estimation.
“The FSA was reformed and renamed amid concerns it was too close to the financial businesses it was supposed to regulate.
“From their intervention in this affair, it seems clear the FCA’s actions still effectively protect these businesses’ ability to make money out of pension funds, rather than protecting pension savers.
“They must take care they are not sleepwalking into yet another huge mis-selling scandal.”