FCA facing calls to probe ‘concerning’ pension transfer advice
The Financial Conduct Authority (FCA) has been urged to contact more than 160,000 people who cashed in their final salary pensions since 2015 and may have received bad pension transfer advice.
The FCA revealed earlier this week it was worried nearly 80 per cent of firms had provided bad advice in the market, which is worth £80bn.
A former member of the regulator’s board and an MP have both called on the FCA to address concerns amid increasing worry that the flood of transfers could result in a new mis-selling pensions scandal.
A freedom of information request revealed the FCA was planning to write to 1,841 advisers about “potential harm” in their defined benefit transfer advice.
It represents 76 per cent of the 2,426 firms advising individuals between 2015 and 2018.
“This data is shocking,” former FCA board member Mick McAteer told the Financial Times. “I had thought multibillion-pound mis-selling scandals belonged in the past, but clearly this is not the case.”
McAteer also called for a full-scale inquiry.
Welsh MP Nick MP said: “Now that we know how serious the situation is, we urgently need to know what is being done about it. The FCA should immediately contact customers at firms where there are problems.”
Pension reforms were introduced in 2015 by ex-chancellor George Osborne to make cashing in secure pensions more attractive.
It prompted a flood of transfers, which has triggered concerns it could result in lower retirement income and the risk of people running out of money.
A select committee review in 2018 said thousands of British Steel pension scheme members had been “shamelessly bamboozled” into transferring pensions to unsuitable funds with high charges.
It comes after the FCA warned earlier this week that “too much” transfer advice was not at the required standard.
The regulator found 69 per cent of almost a quarter of a million people had been recommended to transfer their pensions between April 2015 and September 2018.
“We have already asked firms to consider whether any of their customers are entitled to redress but any customer who is concerned about the advice they received should complain to the firm which gave them the advice,” the FCA said on Friday.