Economy

FSCS readies itself for British Steel firm Active Wealth claims

FSCS readies itself for British Steel firm Active Wealth claims

Chair Frank Field is calling on the Financial Conduct Authority (FCA) to enact sweeping changes.

While only a handful of steel industry sites remain, in Wednesfield, Wednesbury, Walsall and Brierly Hill, a decade ago there were a dozen employing more than a thousand people, many of them signed up to the British Steel Pension Scheme.

Last year, the FCA proposed to drop a safeguard requiring advisers to presume that a defined-benefit transfer is a bad idea for their client. "BSPS members have, over the past year, been exploited for cynical personal gain by dubious financial advisers in tandem with parasitical so-called 'introducers, '" the report summary reads.

National IFA LEBC has added weight to MPs' calls to ban contingent charging on defined benefit pension transfers this morning.

"Following the introduction of pension freedom, with transfer values inflated by low interest rates and uncertainty over the scheme's future, it shouldn't have come as a surprise that many members were interested in transferring out", he said.

It warned of another "major mis-selling scandal", as it pointed to a catalogue of failures that "created ideal conditions for vultures to take advantage".

Unsuitable advice on DB transfers is not only confined to BSPS members, the report warned.

A Financial Conduct Authority (FCA) spokesman said: "We believe the committee's recommendations are sensible".

As a result of this, anyone transferring more than £30,000 is required to take financial advice.

This is more serious than [PPI mis-selling] before because we are supposed to learn from history.

David Cameron Discusses The Need For Politicians To Act On Parenting
Frank Field is the chair of the Work and Pensions Select Committee

"In 2016 the Workers, including over 500 employed by Tata Steel at the Pipe Mills in Hartlepool, had their backs against the wall", said Mr Hill.

But transferring away from a DB pension or a "final salary" scheme is not usually in someone's interests, the committee said - as it means giving up generous and stable benefits in favour of a riskier investment.

But many scheme members had lost trust and a member communication plan proved "woefully inadequate". "Scheme sponsors, trustees, regulators, and government-all culpable in this case-must ensure that the same mistakes are not made again".

The report continued: "The FCA online register is a potentially valuable resource but is now very confusing".

"This was seemingly unforeseen by all those bodies with a duty to watch and act". We charge a fixed fee for advice, regardless of the outcome of that advice.

Figures released by the scheme's trustees on 8 February show that since March 2017, 2,600 pension transfers have been processed by the scheme, for an eye-watering value of £1.1 billion.

The average transfer value for members of the BSPS scheme was £400,000, with 20 people moving funds of more than £1m. Adviser fees charged were as high as 10 per cent, the committee heard.

The report also urged the FCA to reform its register, which lists the details of all regulated financial advisers and their firm.

The committee recommended that TPR review the information and provide support to BSPS members as part of the "Time to Choose" exercise, incorporating feedback from the scheme members.

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