A staggering 88% of complaints about bad pension transfer advice, lodged so far with FOS – by British Steel Pension Scheme members – have been upheld. This compares with an uphold rate of 38% for the wider pool of DB pension transfer complaints lodged with FOS. https://t.co/kx6FxNGaxB
— Josephine Cumbo (@JosephineCumbo) August 18, 2021
The Stats are extraordinary, reflecting the peculiar circumstances that surrounded the months leading up to “time to choose” and “time to choose” itself. To remind ourselves, the choice was meant to be between staying in electing to join a news British Steel Pension Scheme or having a differently shaped pension paid from the PPF. In practice, it became a three way contest, the third way being to transfer to a personal pension arranged by a financial advisor.
The chair of trustees of BSPS told me that the Regulatory Apportionment Arrangement worked fine, other than for the 7,700 steelworkers who opted to take a transfer, many into policies that are extremely unlikely to provide the level of benefit from either the PPF or the new BSPS.
The FT report that
To date the Financial Ombudsman Service (FOS) has received 438 BSPS complaints and has settled 43 with nearly nine in 10, or 88 per cent, of cases awarded in the customers’ favour. This compares with an uphold rate of 34 per cent for all DB pension complaints in the last financial year.
News that these complaints are being upheld at such a rate will not be surprising to Jo Cumbo (or indeed me, Al Rush or the many others who had one on ones with steelworkers in 2017.
My then firm – First Actuarial – presented to the BSPS and its Trustees a service designed to help steelworkers understand what the transfer option was. Our proposal was rejected. I was later told that the Trustees had been advised by the actuaries that there was no historical evidence of steelworkers taking Cash Equivalent Transfer Values.
This brings me to the point of this blog. It is simply not good enough for the Trustees and their advisers to consider this a problem confined to a few IFAs who used chicken dinners to win over financially illiterate steelworkers.
The fact was that those steelworkers had considered the offer made as a CETV and many told us that transferring was a “no-brainer”. This was because no proper case for staying in a form of BSPS – or even the PPF, was made – relative to the CETV.
The failure was a failure not just of regulated advice but of non-regulated guidance.
This does not exonerate regulated advisers or the unregulated lead generators who fed them leads. But it is still part of the picture. I don’t think that the Rooke report properly gets to the bottom of this issue.