Thirty firms and individuals are in the Financial Conduct Authority’s crosshairs for pensions-related misconduct, according to MP John Glen.
The economic secretary to the UK Treasury wrote a letter, seen by International Adviser, to fellow MP Nick Smith after the latter asked for information on the British Steel Pension Scheme (BSPS), as well the regulator’s dealings with rogue pension transfer advisers.
Glen wrote: “In the last five years, the FCA has taken enforcement action against over 15 firms and individuals in respect of pensions-related misconduct.”
He does not specify when the 30 ongoing investigations were launched, but the comparison with the five-year period suggests a strong uptick in regulatory fightback against misconduct by the advisory sector.
Compounding this, the MP for Salisbury also said the UK financial regulator had issued prohibition orders to around 70% more people in 2018, with 24 handed bans compared to 14 in 2017.
Smith has issued a follow up a query to Glen to ask how many of these enforcement actions and investigations are about the BSPS.
Phoenixing
The letter also covered the action taken by the FCA around pension transfer firms phoenixing.
This is when firms “carry on the same business or trade successively through a series of companies, where each becomes insolvent (can’t pay their debts) in turn”, according to the UK government.
On 3 May, the watchdog and its partners announced that they have launched a working group to tackle the issue.
Glen said: “The FCA is taking action to prevent phoenixing through intensive and targeted supervision of firms deemed to be a higher risk of phoenixing.”
He added that, since 2018, the FCA is aware of three instances “where firms and associated individuals have been prevented from re-entering the perimeter where it was suspected that the avoidance of liabilities might be their motivation for seeking authorisation”.
Further cases of suspected phoenixing are under investigation.
Qualifications for IFAs
Glen also flagged the upcoming requirement for pension transfer specialists (PTS).
In October 2018, the FCA said that they must hold a specific qualification for providing advice on investments by October 2020.
He added: “The requirement for a PTS to hold qualifications for both a PTS and for advising on investments will ensure advisers have sufficient knowledge to assess the suitability of a transfer, including the risk, returns and charges of the proposed scheme and underlying investments.”
