Why the FCA should take a leaf out of tPR’s book.

FCAPensions Regulator

 

The Pensions Regulator have been re-born over the last five years and become focussed on helping advisers, trustees and employees solve pension problems. They have started treating us as  customers and not potential criminals.

Sadly, this attitudinal shift doesn’t seem to be happening in all parts of Government. This sad tale reaches me from a respected adviser who was seeking clarification on the “Time Limits” that might apply to litigation on historic pension transfers.

DISP 2.2.8 deals with Time Bar limits but has a specific exclusion for any contract that has been the subject of the Pension Review.

(we find that) Totally ambiguous as that (sentence) has one of two meanings. Either those cases have had their chance to complain and are now barred for ever more OR they are excluded from the Time Bar Rules so can complain at any time in the future.

You can guess which interpretation FOS take.

So I wrote to FCA asking for a decision… what does the exclusion mean.

Answer I quote “…..it wouldn’t be appropriate for us to comment. We retain an independent and impartial service to both firms and consumers and we feel that this would be placed at risk if we did provide you with this information.”

We make the Rules but are unwilling/unable to actually explain what we mean by them. How does telling us what that exclusion was meant to mean put their service at risk. Surely Clarity & Transparency is what they require from us.

So I suggest we all dust off our Pensions Review cases; make certain the files are complete & clear, those clients are coming up to retirement and FOS are happy to consider claims 20 years after we felt we had dealt with them properly.

Frankly this kind of talk (and I’ve heard several mentions of it) is simply not good enough. If I ask a question of the Pensions Regulator, I expect and generally get a straight answer.

It is critically important that we understand what the limitations are on liabilities for advice.

Why this matters

It is not just the issue of pension transfers that is contentious. Within a few months we will see the end of contracting out and the introduction of a new single state pension.

People have been led to believe that they will get £151 per week from the state at retirement age, well they were until the Pension Minister blew the whistle and reported that only 37% of people will get this full entitlement.

What of the other 63%? They will lose pension either from incomplete national insurance records or from contracting out of SERPS (S2P) at some time since 1978.

Many people with complete NI records but with contracted out benefits will wake up to the contracted out benefits not matching the shortfall in state benefits and will cry foul.

Many will turn litigious claiming they were not properly informed of the risks of contracting-out either by the trustees of their schemes, or by the insurers or by their financial advisors.

Once again , the dogs of war will be unleashed – arriving hot on the heals of the ambulances ferrying the financially wounded to the Financial Ombudsman,

The Pension Advisory Service will be awash with claimants, the courts alive with precedents.

There is no doubt that there has been negligence and once again the carousel of blame will turn, stopping alongside those with deepest pockets (or most robust insurance).

Now is the time for Regulators to prepare themselves for this onslaught and presage the calamity. We need strong statements about liability, about indemnity and about time limitations, otherwise we will continue forever to blame each other for the sins of our fathers.

As I mentioned at the start of this blog, the FCA have an example in tPR. I very much hope that the quality of service we enjoy from our Pensions Regulator and – as importantly- its straight talking approach – will become infectious!

Briefcase

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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