The chair of the MPs’ Committee for Work and Pensions has slammed the UK regulator the Financial Conduct Authority (FCA) as “grossly inadequate” over the British Steel pensions mis-selling scandal and has warned it to be careful that it is not “sleepwalking into yet another huge mis-selling scandal”.
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.
Separately, the FCA has announced that it is to collect data for examination and investigation from all firms holding pension transfer permissions this year.
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.”
Now FCA head of supervision Megan Butler has written to the Committee for Work and Pensions, in the light of the British Steel pensions fiasco to confirm that it will be investigating all firms offering pension transfer advice “this year” in order toto assess “practices across the entire market to build a national picture”.
It was revealed in October that only a little more than half (47 of 88) pension transfer schemes investigated by the FCA were deemed “suitable”.
Of the remaining schemes, 17% of the total of 88 were deemed “unsuitable”, with suitability “unclear” in the remaining 36%.
Butler said that the FCA has requested further information from an additional 45 that it knows to be “active in DB transfers”.