Source · Select Committees · Public Accounts Committee
Recommendation 8
8
The FCA failed to take swift and effective action at all stages of the BSPS...
Conclusion
The FCA failed to take swift and effective action at all stages of the BSPS case. It first became aware of the risks of unsuitable transfer advice in 2015 after the introduction of the Pensions Schemes Act but failed to take sufficient action to prevent consumers from being harmed. At the time, it did not have adequate insights into the behaviour of smaller advice firms and its work was limited to high-level market wide research to identify high- risk firms, rather than specific, targeted interventions.18 This lack of proactive intervention highlights clear limitations with the FCA’s supervisory approach, and the impacts of the BSPS case demonstrate its failure to prevent harm before it has fully manifested itself in the market.19 The FCA recognised that there were significant issues in its supervision of small advice firms, which did not deliver the necessary oversight, and told us that this was a key contributing factor to the financial harm experienced by members.20
Government Response
Not Addressed
HM Government
Not Addressed
The Financial Conduct Authority (FCA) agrees with the Committee’s recommendation. Recommendation Implemented An update in line with this recommendation is contained within the letter from the Chief Executive of the FCA to the Chair of the Committee, dated 28 September 2022. The FCA shares the significant concerns of steelworkers, MPs and other stakeholders about the levels of unsuitable advice and recognises the harm that this has caused to steelworkers and communities. Over the past year, the FCA has met with over 400 steelworkers, providing support and listening to their concerns. The FCA has also carried out significant work to date to analyse both the extent and the impact of unsuitable advice on steelworkers. This is set out in the FCA’s consultation paper (CP 22/6 published in March 2022). Should we go ahead with a redress scheme, the FCA will be happy to update the committee with final unsuitability rates once the scheme closes. The Joint Protocol, currently operating between the FCA, the Pensions Regulator (tPR), the Pension Protection Fund (PPF) and the Money and Pensions Service (MaPS), sets a framework for increased communication and information sharing. Since its inception in January 2019, it has facilitated greater joint working and early intervention to address the risk of concentrated and/or significant numbers of members receiving unsuitable advice on DB transfers and/or any associated risks of pension scams or mis-selling that consumers may face. Actions have included issuing joint proactive statements, setting out the concerns and action each organisation will take, as exemplified by the statements associated with the Rolls Royce pension scheme and the P&O pension scheme. The FCA’s regular data return (discussed under recommendation 2 below) also enables the regulator to proactively monitor trends and engage with firms which are active in the DB market.