Another day and another sorry story that once again tarnishes the reputation of the financial advisory profession.
When you watch the BBC News and you hear the stories of how many of the steeel workers have been enticed into moving their defined benefit pensions into, high charging SIPPs with weird and not very wonderful investments, you realise we, a s a profession, have an awful lot to do too make things better. Which is why I applaud the work done by Al Rush, someone who it is fair to say we don't always see eye to eye, is doing to help the steel workers in various UK Locations.
Al has set up Project CHIVE (Community, Help, Information, Volunteer exchange), whereby Financial Advisers from across the country are volunteering their time to help counsel some of these who need to make a decision about their British Steel Pension Scheme. They have until 22nd December 2017 to make a decision to:
- Move with the old scheme into the Pension Protection Fund?
- Or switch to the new British Steel Pension Scheme?
- Or transfer out completely.
Because of the deadline, a lot of unscrupulous advisers have been preying on the steelworkers and left them in a terrible position. There's a lot of vulnerable people out there making decisions on amounts of money they've never experienced before in their lives.
Megan Butler, of the FCA, said: "This is a highly specialised area of financial advice. Not every advisor can do this. They need a very particular set of permissions and skills to be able to do this.
"But what we have found is that advisors aren't always giving the care and attention they need to the individual to ensure that the advice is specific enough and suitable for them."
Let's hope the regulator stamps down on this very quickly to limit the damage already done and prevent anymore of this happening.
The FCA says British Steel Pension Scheme members should complain to their IFA if they don't think the transfer advice was right.
As Josephine Cumbo from the FT pointed out to the FCA, you have to know what was wrong to know something wasn't right.
Money Mail took a copy of the recommendation and showed it to Robert Reid, a highly-regarded pensions expert at consultancy firm Canscot Solutions. He was extremely critical. Mr Reid says: 'From what I have seen, this adviser starts off with the objective of moving the money. These people just think that they are getting a transfer and that is that — no other option is considered. 'The figures and terms being quoted in the report don't mean anything to most people and there is no explanation of the fund they are invested in and how it works. 'Basically, you're expecting someone who has taken no interest in their pension up until now to suddenly have a masters degree in finance. From the evidence I have seen here, I would not have told this person to transfer.'