The Financial Conduct Authority has been accused of providing “insufficient support” to members of the British Steel Pension Scheme, as they face big decisions about their pension arrangements.
Addressing the House of Commons today, 7 December, Labour MP for Blaenau Gwent Nick Smith said: “I am afraid of a steelworker’s pension scandal brewing, constituents of mine are worried about making the wrong decision for a pension transfer. The Financial Conduct Authority is providing insufficient support to steelworkers at this crucial time.”
He demanded the FCA provide an action plan to support steelworkers in making their decision.
Members of the scheme have three options; switch to the new BSPS, remain in the old scheme, which will fall into the Pension Protection Fund, or transfer out of the scheme, in return for a lump sum payment.
Yesterday, 6 December, the trustee of the BSPS extended the guarantee period for transfer quotations given between 1 December 2017 and 25 January 2018, to the 26 January 2018. The decision follows concerns over reports of “inappropriate financial advice” being given to members who feel pressured into making a decision.
In response, Leader of the House of Commons Andrea Leadsom said pensions is a “complex subject”, and that people do need the “right advice”. She urged Smith to seek further guidance from the FCA so that he can help his own constituents.
However, in a letter to Work and Pensions Committee chair Frank Field, from the FCA’s executive director of strategy and competition Christopher Woolard, it was stated that the FCA does not regulate defined benefit pension schemes, and this is the role of The Pensions Regulator.
“As such we are not able to intervene or speak on the specifics of the BSPS, or the decisions for members. We are, however, responsible for the regulation of advisers and we have already taken steps to address some pressing concerns in this area.”
He said seminars have been held in the areas where members of the BSPS live and the FCA has also written to all advisers in the local areas “to reaffirm our expectations to them”.
“We have clear rules and requirements of regulated advisers providing advice on pension transfers and we are taking action now to ensure firms are aware of their obligations,” he wrote.
An FCA spokesperson said: “The FCA does not regulate DB pension schemes, such as the British Steel Pension Scheme, this is the role of The Pensions Regulator. Therefore, the FCA cannot intervene in the specifics of the Scheme such as the decisions facing members. The FCA is unable to provide advice to members but is taking action in the areas that we are able to and will continue to do so.
“The FCA is responsible for the regulation of financial advisers. When we became aware of particular concerns involving advisers, we quickly responded by visiting areas around British Steel sites to speak to advisers and make our expectations clear. Where we have had concerns about the advice being given by firms, we have prevented them from continuing to provide advice.
“Scheme members should get appropriate guidance and regulated advice before making any decision. The FCA has been liaising with The Pensions Advisory Service, who affected members should call for free, impartial guidance on 020 7932 9522.”