— Josephine Cumbo (@JosephineCumbo) April 28, 2022
I love retro “cut and paste”, especially when it is from one of our most digitally advanced journalists. Jo is clearly keen to make the point that there is a serious flaw in the FCA’s £71m redress plan for BSPS , the flaw is that the real cost of redress is up to eight times higher (£568m). So – from micro-blog to the vasty fields of henrytapper.com. here is the full version! 3 lucky readers can read Jo’s article on this free link.
Of course it is always somebody else’s fault and the rapid staff turnover at the FCA means that whoever took decisions in 2017 will not be held responsible for what happens in 2022.
This particularly applies to leadership who presumably will be no more accountable in 2027 for the decisions they take today. Which is why it is important that they are held to account today rather than in five years time.
Holding regulators to account
I agree with the import of this tweet, regulatory failure is paid for by higher FSCS fees which are passed on to the consumer through higher charges. I am not speaking in abstract terms, I pay these fees running an FCA regulated firm and pay for them in my annual charges to those who manage my money.
There is no “cost to the industry” there is no industry money, it all belongs to consumers. All of those individuals that trusted advisers, trusted the regulator. Welcome to Money Scam Great Britain where statutory bodies just don’t care.
— Moneytrainers – An Adviser in Recovery (@Moneytrainers) April 28, 2022
As a “consumer”, I am entitled to expect better and having the “bully pulpit” of a well read blog, I hope that I marshal some weight of opinion that gets listened to.
So I will say this again , and for the nth time. The situation that happened with BSPS was not a result of the pension freedoms but to do with a failure by TPR, FCA and the Trustees of BSPS, to understand that many members had just had enough of Tata and wanted out. This statement by the FCA CEO is simply wrong.
He [Nikhil Rathi]suggested that the FCA’s job was made tougher by the “rapid” introduction of pension freedom reforms, instigated by the Treasury in 2014, which made pension transfers more attractive when the regulator’s view was that this option was not suitable for most.
It is not right to blame pension freedoms, we had a pension transfer problem before pension freedoms and we will continue to have problems with pensions so long as we have a private pension system that promotes retirement wealth over retirement income.
My small amount of time in Port Talbot impressed on me just how little regard is given by everyday people to their long-term financial need for income and how easily they can be swayed by arguments that holding capital in wealth management means the nastiest hardest problem in finance has been sorted. It hasn’t, it comes back to bite you twice as hard when you discover that your wealth is finite while the income you gave up lasts as long as you do – and if you have a partner or spouse, maybe longer!
Perhaps that is what is meant by Rathi’s cryptic statement that the transfer option “was not suitable for most”. If that is what he is saying let him say it. The FCA should be clearer and saying that for most people a pension is better than a pot.
I believe that a pot is mysterious and alluring until you find it is empty, when the income it was supposed to produce runs out and you are left on state pension and (if you claim it) pension credit. We built a private pension system in this country which we have been busy dismantling through the various de-risking initiatives that have enriched the wealth management industry beyond measure.
It is now time for Nikhil Rathi and the FCA to accept that what we he is left with (the investment pathways) are not fit for the purpose of providing second tier pensions. We need to build back better – with proper pension products that offer people better rates by being invested productively, that use the tried and tested means of longevity protection – longevity pooling – and which are promoted by a regulatory system that supports the policy initiatives of the Department of Work and Pensions.