The outgoing chief executive of the Financial Conduct Authority has told a Treasury select committee that around 370 firms with defined benefit (DB) pension transfer permissions have left the market.
The DB space has been a big focus for the UK regulator ever since the British Steel Pension Scheme (BSPS) scandal in 2018.
Andrew Bailey, who is set to become the governor of the Bank of England, said on 4 March that over the last two years “around about 370 firms have left the market” because either “they concluded or we did not consider that they were set up to” be in the space.
He added that this was around 12% of the market.
Recently, International Adviser reported on a freedom of information request, which found the FCA had stopped 21 firms from providing DB advice in 2019.
Mis-selling
During the Treasury select committee, Bailey added: “We have a large investigation going on surrounding quite a large number of other firms, where we believe [it] looks like [there] was mis-selling.
“The Financial Services Compensation Scheme (FSCS) is there [to help consumers]. I think we have to wait for the completion of the enforcement process that we’re going through to see actually where we come out on that.”
In November, Fiona Tait, technical director at Intelligent Pensions, said, during a Chartered Insurance Institute (CII) conference, that the financial services industry could see the emergence of a DB pension transfer mis-selling scandal in 2020.
Crackdown
In a bid to tackle problems in the market, Bailey said the FCA has introduced “more direction for the industry on how they give advice and guidance”.
The FCA chief also said the regulator has been on a “catch-up process” to deal with issues stemming from the DB market because pension freedoms were introduced “too quickly”.
He added that the pension freedoms policymaking “wasn’t considered enough”, when it was introduced in 2015 by then-chancellor George Osborne who opted not to consult with industry before making the announcement.
