Regulator to investigate pension transfer firms
The FCA’s head of supervision, Megan Butler, revealed the plans in an open letter to Frank Field, chair of the Work and Pensions select committee, regarding its inquiry into the British Steel Pension Scheme.
The British Steel Pension Scheme has become controversial after members were targeted by unregulated ‘introducers’ to advisory firms. There was concern that members might be encouraged to opt out of their schemes, forgoing the security of a long-term income in retirement.
Steelworkers had been targeted after a deadline of 22 December was imposed to move their DB pension pots to a new plan being created, BSPS II, or stay in the current fund.
In its examination of defined benefit transfers by financial advisers, the FCA has found that only around half were suitable. 17% were actively unsuitable and in the remaining 36% of cases, suitability was unclear.
Butler said the regulator has asked 45 additional firms for information.
Steve Webb, director of policy at mutual insurer Royal London, said: “The FCA is quite right to gather systematic information about how the transfer market is working. While the focus on the British Steel case is understandable, it is important that the regulator gathers data on the pensions advice which is given week-in, week-out across the country.
“It is in the interests of members, advisers and providers that the right people transfer and the wrong people do not, based on high quality, impartial advice. If the FCA finds examples of bad practice they should be weeded out so that we have a healthy and effective market for pension transfer advice.”