A review of the British Steel Pension Scheme (BSPS) saga conducted by former Money Advice Service chief executive Caroline Rookes has suggested pension scheme trustees should compile a panel of recommended advisers for pension transfers.
In the independent report, commissioned by The Pensions Regulator (TPR), Rookes highlighted shortcomings in the information provided to British Steel members considering a defined benefit (DB) transfer.
Rookes said: 'It would have been helpful if the trustees had compiled a list of advisers willing and able to take on pensions transfer advice for the BSPS members.
'Instead, members were referred to Unbiased or the FCA website. The former is not unbiased and the latter is not easy to use, nor does it make clear if the particular firm of advisers deal with DB transfers.
'It also includes advisers under investigation. The trade unions would have liked to recommend specific advisers but were advised that they would be crossing the line into advice.'
The report recommends that TPR 'explore if there is a way to allow trustees or trade unions to identify a panel of financial advice firms that members can select from'.
Although the report did not focus on it, the review did say it had found evidence of advisers behaving in ‘unscrupulous ways, paying introducers and inducing people to attend sessions with the offer of a free lunch’. The report was also critical of the way the British Steel trustees handled the communication to members.
Among a host of other recommendations for regulators, the new Single Financial Guidance Body (SFGB) and scheme trustees, the report also proposes two key legislative changes.
The first implores TPR to discuss with the Department for Work and Pensions (DWP) whether there is 'any scope for legislation to simplify the choices in the event of a restructuring, whether through allowing a partial default into a new scheme or setting requirements for a new scheme to provide better benefits than the PPF'.
The second suggests TPR and the Financial Conduct Authority (FCA) explore with the DWP whether TPR should be given power to consider the preparedness of a scheme to handle the member consultation in the event of a regulated apportionment agreement (RAA), and if necessary, to delay or stop it.
Rookes also urges TPR, the FCA and the SFGB to review their website content and establish joint guidance for pension scheme members specifically on the subject of transferring out of DB schemes.
TPR chief executive Lesley Titcomb said: ‘We are grateful to Caroline Rookes for identifying a number of useful themes in her review which will help ensure pension savers are less likely to make transfer choices which are not in their best interests. We will now work together with trustees and the government so that we can all address the review’s recommendations.
‘By working closely with the FCA, TPAS and now the Single Financial Guidance Body, we are determined to help minimise a repeat of the difficult circumstances in which some members of the British Steel Pension Scheme have found themselves.’
FCA executive director of supervision Megan Butler (pictured above) added: ‘The FCA stands by the action it took in those challenging times but, as with every case where we have had to intervene, there are always important lessons to be learnt. The FCA remains firmly committed to working with TPR and the Single Financial Guidance Body – and other organisations – to ensure we are all working together to continue to protect pension savers and take on board the lessons from British Steel.
‘Much of this work is already underway, and has been since early 2018 – and our joint protocol is the product of that initial work. However, Caroline has made some further recommendations that we will be discussing with our counterparts at TPR and the SFGB.’
SFGB chief executive John Govett said the new body would take forward ther report’s recommendations on the importance of collaboration with regulators and the pensions industry, adding that this would be ‘key to providing better consumer protection’.