The British Steel Pension Scheme (BSPS) scandal has had severe ramifications for the final salary pension transfer sector at large, resulting in thousands of compensation claims and swathes of regulatory changes from the Financial Conduct Authority (FCA).
Numerous independent financial advisers (IFAs) and self-invested personal pension (SIPP) providers have lost their authorisation to perform final salary pension transfers entirely. Over 13 firms linked to BSPS pension transfers have received new restrictions from the FCA and several IFAs have collapsed as a result. Frank Field of the Work and Pensions Select Committee initially branded the FCA’s response to the situation as ‘grossly inadequate’ but has since described the regulator’s new direction as a welcome change.
The FCA has sought to address claims that it was lackadaisical in response to the final salary pension transfer debacle by renewing its vow to improve suitability assessments for the service. They aim to bring the maligned service to within a 90% level of suitability, which reflects the rates of the broader pension sector.
FCA: Final Salary Pension Transfer Suitability
The FCA has affirmed on numerous occasions that conducting a final salary pension transfer is rarely in the best interests of the client. In the new context post-BSPS, it might be more applicable to claim that the service is no longer in the best interests of the provider. As the FCA has cracked down on illegitimate final salary pension transfer activity, scrutiny regarding any such activity has become increasingly stringent. Alongside this, transfer values have gradually declined, forcing more and more IFAs and SIPP providers to voluntarily suspend their final salary pension transfer activity.
Most recently, wealth management firm Mattioli Woods voluntarily quit the final salary pension transfer sector following an agreement with the FCA. The firm repeated the growing mantra that this service is still profitable but is no longer worth the risk.
This collaborative action has formed the backbone of the FCA’s sweeping action against firms found to be conducting business that is harmful to consumers. Megan Butler, executive director of supervision at the FCA, claimed that the regulator was continuing to gather crucial evidence against culpable firms so that they can continue to act where necessary. She expanded on how this approach would help reduce the ongoing suitability issues facing final salary pension transfers:
‘It has been a key part of our supervisory work, it is going to continue to be until we see standards improve from the level we have previously published, where only 34% giving suitable advice in this area, and we will carry on this work until that statistic is much closer to what we have seen more broadly in the advice sector, which is around 90%.’
Final Salary Pension Transfer Compensation with Money and Me Claims
Money and Me Claims is an expert in the field of final salary pension transfer claims, with significant success achieving compensation for our clients. We understand the financial and emotional commitment that a compensation claim represents, especially if you have lost money through a pension transfer service that was unsuitable for you.