The Rookes report is a fine piece of work but actions speak louder than words.

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Having read Caroline Rookes’ review of the regulator’s handling of the BSPS “Time to Choose” episode , I’m  satisfied that she’s sending the right messages to the various authorities involved.

There are four authorities who have their say in the report’s press release. They include the soon to be defunct TPAS, the SFGB which is taking on TPAS’ responsibilities, the FCA and the Pensions Regulator. Lurking in the shadows are the Treasury and DWP who jointly fund these regulators and guidance agencies. To the list we could add FSCS , FOS and the Pensions Ombudsman.

This is a report from a civil servant to civil servants and it generally hits its mark.

The headlines will be about the provision of advice

Perhaps the most powerful statement by anyone involved in the Port Talbot scams was how one steel man followed the advice from the Money Advice Service to the letter and was referred to Darren Reynolds of Active Wealth (via Unbiased). As Rooks says- Unbiased isn’t unbiased and the  circle that led the FCA and MAS to point steel men to their nemesis shows just how “due process” can destroy confidence.

We all know how the bottom feeders like Active Wealth behaved, it’s been a matter of public record since the inquiry carried out by Frank Field and his Select Committee.

But there is another advisor that Rooks has stopped short of naming, who should be mentioned in this. That advisor was paid by the Trustees of BSPS to prepare its membership for the Time to Choose and the report stops short of naming it.

But everything in the report suggests that the opportunity to avert the problems of Port Talbot and elsewhere  was missed because of the failure of the Trustees to put in place the basic support that members needed when they considered their options. The support that was needed and not supplied was the provision of a transfer helpline and on the ground help to members struggling to understand the implication of unlocking the transfer treasure chest.

The headline about advice should not be about the failings of Active Wealth, but about the failings of the Trustees to prepare their members for Time to Choose.

The complacency of the Trustee’s advisors was pointed out to Caroline Rookes by me and I will continue to argue that it is the support mechanism that failed the Trustees – not the Trustees’ judgement.

In my opinion , professional consultants- whether working for the employer or trustees, have become complicit in the transfer frenzy that hit Britain in 2017 and the first part of 2018. It is hardly surprising. Senior consultants were often busy transferring out their own DB CETVs on highly advantageous terms. The prevailing opinion in the press was summed up by Merryn Somerset-Webb who told her readership in the FT that if she had a DB benefit – she’d transfer it.

Until Port Talbot, DB transfers were perceived as the prerogative of the wealthy and not something that the working man could indulge in.

Contingent Charging and the part it played

Oddly, the report barely mentions contingent charging and the part it played in the transfer of nearly 20% of the deferred BSPS members to personal pensions. It would have been a useful contribution to the W&P Select’s call for evidence, if the Rookes’ review could have estimated what percentage of CETV’s taken, resulted from advice offered on a “no transfer – no fee” basis.

My guess would be way over 90% of the 8000 transfers made.

We can only guess at what percentage of transfer reports would have been commissioned if they had been commissioned on a non-contingent basis. Those reports would have had to have been paid for out of taxed savings and not out of a tax-exempt fund, they’d have been subject to VAT and most importantly of all, they’d have been paid for in cash from a bank account owned by the transferor.

It may be contentious , but the questions surrounding contingent charging are too important to be ignored. It is a shame that the report cannot be explicit on this matter.

It’s good to see Al Rush and Chive recognised

One of the very best things to have come out of the BSPS saga has been Chive- the affiliation of pension transfer specialists committed to raising the game of advice in this area.

The report explicitly mentions Al several times which is absolutely right. When the world watched, Al took action and brought the fate of the steel men to the public’s attention. Jo Cumbo must also be praised for seeing what was going on and taking the initiative.

I doubt that there will be another BSPS and to a large degree that is down to Al and those like him who insisted on fair play for steel men who were vulnerable to the point where most should have been deemed unsuitable for taking on the burden of managing their own money. I saw at first hand Al tell people he knew they had done the wrong thing. That takes a lot of courage- but courage has never been Al’s short suit.

A fine piece of work but…

As Paul Lewis would say “the report is delivered to the resounding thud of stable doors shutting”. It is nearly two years since the RAA was agreed, 18months since the action plan for communicating to members was finalised and over a year since the end of the Time to Choose.

The big elephants remain in the room and they continue to stink the room out. Pension consultants continue to consider transfers as meretricious to a scheme’s funding position and tacitly comply with the culture that has seen over £50 billion transfer out of DB schemes in the past two years.

Financial advisers continue to argue for the practice of contingent charging (with a few honourable exceptions). The only thing that is curbing transfers at present is the price of Professional Indemnity Insurance.

The soft measures put forward by Caroline Rookes are good measures, but they need to be accompanied by tough action by the regulators. Pension Consultants advising trustees must be proactive in organising proper advice be in place from proper advisers – the report points to Chive as a way forward.

Financial advisers need to be protected from themselves. Contingent charging should be the exception not the rule. The SFGB , if it is to play a part in all this, should e commissioned to set up a review board where cases of financial hardship preventing the payment of upfront fees, can be reviewed. It would help if advisers putting such cases forward should underwrite the process on a pro-bono basis. That would ensure that cases of hardship were limited and nobody tried it on.

Action speaks louder than words

The comments from regulators that accompany the press release are longer than the press release. It would seem that regulators are falling over themselves to be involve after the fact.

All these words cannot hide the fact that the Regulators had to be woken up by Al, Jo, Frank Field and others.

Now we hear that these multiple regulators and the guidance bodies and the Government departments are working together. But the fundamental problems around advice remain unsolved – and unaddressed.

The finger of blame points at certain consultancies and IFA firms who have behaved weakly and without due regard to the long-term interests of members. I do not have to mention them, I have done so repeatedly in this blob since I first started writing about BSPS in the spring of 2017.

My words led to my personal actions and I hope that my continued calls for a ban on contingent charging and changes to the way advice is offered to trustees , will be heeded.

Action speaks louder than words.

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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