The Financial Conduct Authority stepped in after concerns were raised about the financial advice given to members of the British Steel Pension Scheme (BSPS), which is currently being restructured.
Members have to decide by next week whether to move from their old DB scheme to a new, inferior scheme or transfer out, reports The Times.
Advice firm visits
On Monday, the watchdog announced it had undertaken a significant information gathering exercise to identify which firms have been most active in advising consumers to transfer out of the BSPS.
This involved gathering information from 50 financial advice firms, 12 Sipp operators, and the BSPS scheme administrators.
Based on the data, the FCA visited seven advice firms and requested files from a further four. As a result, three firms have stopped advising consumers on pension transfers.
The FCA plans to visit a further six firms this week.
St James’s Place
In a statement on Wednesday, an SJP spokesman said the firm “has decided that we will no longer be accepting new transfer requests” from members of the BSPS.
“However, we will continue to complete those already in the pipeline, where a recommendation to transfer was made by a St James’s Place adviser prior to 8 December.”
SJP confirmed to International Adviser that it is not one of the three advice firms to stop advising on pension transfers at the behest of the FCA and the move was a separate business decision.
To transfer or not to transfer
The select committee has warned that “retirement savings sharks” are reportedly circling BSPS members.
It said that one steelworker is believed to have missed out on £200,000 ($266,724, €226,848) of pension transfer value after being introduced to and advised by firms appearing before the committee on Wednesday.
Two firms were identified as providing “questionable advice”. One of them, Active Wealth, has had its permission to accept new pension business suspended by the FCA.
The UK’s lifeboat Pension Protection Fund (PPF) described its concerns about the reported unscrupulous behaviours of some IFAs to the committee. This included the mischaracterisation of the value and viability of PPF payments in order to unsettle and sow fear among clients.
Action group
The British Steel Pension Members Group, a social media platform created by and for scheme members to share information, echoed the PPF’s concerns.
The group described a surge in demand for transfers as a “fight or flight” response, stoked by “mind-blowingly large” transfer values, peer pressure and promotional activity by intermediaries.
Faced with a shortage of reputable local IFAs with capacity, scheme members have been set on a “turbulent journey which left them vulnerable to dubious advisers and unsuitable financial advice”, the group said.
