MP writes to regulators over role of introducers in British Steel pension scandal

Labour MP, Nick Smith, has written to the Financial Conduct Authority (FCA), the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) regarding the role of introducers in the British Steel pension scandal.

Smith stated that he was concerned about the regulation of the introducers and the enforcement over their activities, and queried what role each of the regulators play.

He noted that introducers were widely reported to have played a ‘key role’ in the mis-selling of British Steel Pension Scheme (BSPS) transfers, and although many were authorised and regulated financial advisers, some were not and were therefore not overseen by the FCA and their clients were not protected by the FOS and FSCS.

“I am deeply concerned at the number of BSPS mis-selling cases that involve introducers, and the fact that they often act at the margins of regulation,” he wrote.

Smith pointed to the case of one unauthorised introducer, Celtic Wealth Management, which allegedly referred 75 steelworkers to Active Wealth, which has since been declared in default and compensation was paid to claimants by the FSCS.

However, he stated that the amount of compensation steelworkers were allowed to claim was limited by the fact that only one of the parties (Active Wealth) was liable, despite the two parties acting together in the mis-selling.

“We have also been informed that the FOS is wholesale failing to uphold any introducer complaints where there is no written evidence of advice being given by the introducer, and a refusal to uphold any complaints that there was a joint venture between the introducer and the pension transfer specialist,” he added.

Smith sought answers from all three regulators as to whether they have rules in place to regulate or authorise the work of financial advisers as introducers, what guidance they provide to unauthorised introducers on how to appropriately conduct their activities, and if they had taken legal or enforcement action against any introducers that were involved in the BSPS scandal.

“I also wish to make a broader point about the authorisation that regulators give to firms, which firms understandably use as endorsements in their marketing to potential clients,” he continued.

“An introducer, who may also be an authorised IFA, could feature the phrase ‘Authorised and regulated by the FCA’ on their website or promotional material.

“However, they may only be regulated to perform certain activities, such as investments, rather than DB pension transfers. This could have the effect that a consumer believes the firm is fully regulated by the FCA, when they may not be regulated to provide the services that they are doing.

“In this instance, there could be the greater consequence that any transactions may not be eligible for compensation by either the FOS or FSCS.”

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