On June 19th 2017 , 500 financial advisers crammed into the East of England showground’s hall to participate in the Great British Transfer Debate. It was originally to be a small meeting between First Actuarial and some IFAs, organised by Al Rush and myself. It’s explosion suggested that pension transfers were a much hotter topic than anyone had previously supposed.
Later that year Al Rush and I went to Port Talbot and reported back on what we saw. Jo Cumbo picked up on our reports, the Work and Pensions Select Committee interviewed steel men , the FCA and the BSPS trustees.
A journey for me which started out picking up @henryhtapper in London one wintery morning in 2017, has ended up costing, potentially, in the region of £350 million to remedy. It has also made me many new friends (and enemies) and reconnected me with wonderful Port Talbot. https://t.co/uAM6wLU0yd pic.twitter.com/Snpv1WVLU6
— Al Rush (@exRAF_Al) June 24, 2020
I got to speak of what I saw, Darren Reynolds failed to show up claiming he had been intimidated by Al, Al failed to show up being banned for allegations of intimidation. It was all rather messy, got a lot of headlines but the transfers went on.
We now know that one in five of those eligible to transfer did so and this resulted in over £3bn moving from a defined benefit scheme to a variety of DC plans, some of them wildly inappropriate for the steelworker’s needs.
The FCA has written to the 7700 steelworkers who took transfer values with a formidable intervention. This from New Model Adviser.
‘Our findings are sufficiently concerning that we have taken the formal step of contacting you directly and encouraging you to act. You should check the advice you were given and, where appropriate, complain in order to seek any compensation you are potentially due,’ Butler wrote.
The FCA provided the steelworkers with a link to its ‘advice checker’ which can help them decide if they should make a claim. It said that claims should first be made to the firm itself, before approaching the Financial Ombudsman Service (FOS). If the advice firm is no longer trading complaints will be considered by the Financial Services Compensation Scheme (FSCS).
Butler also warned steelworkers against using a claims management company (CMC) or a solicitor to make a claim.
‘It is quick and simple to make a complaint and you do not need to use a CMC or a solicitor to do this, if you do you will have to share any compensation you get with them.’
Mick McAteer, co-director of the Financial Inclusion Centre, a think-tank, and a former FCA board member, estimated the compensation bill could total more than £350m, on the basis that 80 per cent of members may have been given bad advice. The average value of awards so far made to BSPS members is £56,000.
We cannot allow this happen again – lessons must be learned
In a week when the FCA got a new CEO, it should be remembered that the FCA never went to that first Great Pension Transfer Debate, were nowhere to be seen in Port Talbot until the WPC put the wind under them and that it is now three years.
Although it is good that the FCA has finally taken steps to right wrongs and shut the stable door on contingent charging, it has acted too slowly.
The FCA cannot draw a line under BSPS with those 7700 letters, the cost of the compensation will be met by good advisers through PI bills and higher levies. Those costs will be passed onto people taking advice in the future. This bill could and should have been avoided by quicker and more decisive actions from the FCA and to a degree from tPR.