So who was to blame for the British Steel pension scandal?
Five years on and we are still debating the issue because for the steelworkers the question is still relevant. They are still out of pocket, and they still want to know who was responsible.
Some like to blame the pension freedoms. It is because of the flexibilities brought in by the 2015 reforms that transferring out of a defined benefit pension scheme suddenly became more appealing.
And when you speak to steelworkers, promises they were made that they could pass on their entire pot to their loved one certainly was important.
Some like to blame regulators and the government. There is no doubt in my mind that the steelworkers were badly let down by the people who were supposed to protect them.
They found themselves in a highly stressful situation and were ill-prepared for the choices they were faced with.
But you only need to glance through the National Audit Office report published last week, or the Insolvency Service announcement banning Active Wealth boss Darren Reynolds, or the Financial Conduct Authority statement fining Geoffrey Armin from Retirement and Pension Planning Services £1.28m, and you will realise that what was to blame was financial advisers.
And not just a handful of rotten apples either, not scammers and, while they were also to blame, not introducers – but hundreds of advisers who misled other human beings for their own personal gain.
It was an industry-wide failure.
There were 369 businesses who advised on British Steel transfers – that is a quarter of the entire number of businesses permitted to do pension transfers. In 95 per cent of British Steel cases a fully-regulated, independent financial adviser was involved.
Imagine if a quarter of all policemen turned out to be corrupt, or a quarter of all doctors reckless, or a quarter of all bankers fraudsters. The country would be in uproar.
One in four members of this entire part of the industry was involved in the British Steel scandal, and yet advisers still wonder why it is so hard to build trust.
The one good thing you can say about British Steel is that it has helped to weed out the rotten advisers. But even this is a slow process.
Of the 45 companies that the FCA asked to review the advice they had given and pay redress, only two have finished this work, paying out more than £12mn.
There are 17 that decided doing a review would be too great and simply went bust.
Amazingly, 12 businesses tried to reapply for permissions (but were denied).
Given what happened in Port Talbot it is flabbergasting that only one business has faced enforcement. There are 30 enforcement investigations ongoing, but the FCA really does need to get a move on.
We need closure – and quickly. Compensation needs paying, the businesses that did wrong need naming and shaming, and directors need banning.
The regulator should also name the insurance companies who received the most from the £2.8bn transferred out of British Steel. They have questions to answer too.
None of them batted an eyelid when they started to receive millions of pounds.
Then, and only then, can financial advisers move on from this terrible scandal.
Triple lock remains
It looks like the triple lock will be back next year, which probably will not be popular among some financial advisers.
Many seem to think of the triple lock as an expensive indulgence.
While it is true that the cost of the lock is very expensive, this attitude baffles me. Surely a financial adviser’s job is to help clients achieve stability in retirement and nothing delivers that better than the state pension.
A financial adviser’s role is not to be an economic commentator but a representative for their clients. In that context, who would deny them such a generous income?
I have two explanations for this. One is that they are angry at the government for making it look so easy to achieve a steady inflation-linked income in retirement, when really it is very hard indeed.
The other is that they are annoyed at personally paying taxes to fund the pensions of other people because usually it is other people’s pensions that pay their own.
It looks increasingly likely that unhappy FCA staff who are part of the Unite union could go on strike.
Now insiders are warning that it will hamper the regulator’s ‘operational effectiveness’.
Will anyone notice though?
NOTE: We claim no right or title to this article which appears on FT Adviser dot com Author: James Coney.