The Personal Finance Society has stated that a more balanced and objective review is required to ensure the public are not disserved by reckless statements, in response to the Work and Pensions Select Committee report on the British Steel pension scheme.
“The committee must not ignore the underlying root cause of the problems faced by thousands of British Steel workers, who were forced into making unqualified and very emotional decisions within a completely unreasonable deadline,” said PFS chief executive, Keith Richards.
“Regrettably, due to the spurious actions of a few unregulated introducer firms, we are now seeing the blame and responsibility being disproportionately placed upon the advice sector – which is not in the public’s best interest,” he asserted.
“Sadly, all British Steel pension scheme transfers will now come under scrutiny and genuine advisers will also fall under suspicion of doing the wrong thing. As a result, there is a growing risk of wider implications for any DB transfer.
“Poor practice and over-commercial activity will always be unacceptable and there is no defence for any firm which has compromised professional standards because they saw the pension reforms as a quick money-making opportunity.
“But spare a thought for the majority of genuine advisers who are being unfairly implicated in this mess and who themselves may now become victims of the fiasco.
“There should be little doubt that we are all in this together, yet the greater degree of responsibility sits with the scheme trustees, the employer and indeed The Pensions Regulator, who appear to have mismanaged the matter from the outset.”
Richards went on to say that little consultation or guidance appeared to have been provided to the workers, who he said were “shocked and angry at the news that their pension was at risk, the degree to which many would end up as ‘insistent clients’ to protect what they could get hold of now, and the lack of market capacity to advise scheme members within the limited timeframe.”
He continued: “It is all very well to be wise with hindsight, but foresight and the need for planning and support should have been blindingly obvious. Given the mandated requirement for professional advice above £30k, workers and the advice sector were both placed in an untenable scenario and the government must shoulder a share of the responsibility for introducing pension freedoms (including DB schemes), without consulting the market, its regulators, or indeed anyone.
“It is relatively easy for the Work and Pensions Select Committee to apportion blame after the event – but where were they when it came to having a bit of foresight to help mitigate these inevitable unintended consequences? They seem hastily intent on becoming judge, jury and executioner now that this has happened.
“It is extremely disappointing that the authorities and the government are not taking a more responsible role and accepting their fair share of accountability for what many warned would happen. Meanwhile, everyone else will be blamed, which is unacceptable and will do little to engender public confidence.
“However, this is not the time for minority-distorted sensationalism. What is required is calm, considered and balanced intervention. The priorities should now be to avoid causing any further frenzy and mistrust among consumers and ensuring this disaster is not repeated in the future.”
Richards pointed out that the Personal Finance Society was the first to issue clear guidance to members following the introduction of pension freedoms and in particular took a tougher stance on the issue of ‘insistent client’ than both the government and regulators. “Good practice guides for pension transfers have also been available for some time,” he added, “together with warnings regarding the increased risk of ‘conflicts of interest’.
“Professional advice was mandated for good reason and the advice profession continues to play a vital role. It must be remembered that there is substantial evidence* that those who receive professional advice are better off as a result. There is no reason why this should not apply to the vast majority of cases here.”