Liberal Democrat pensions spokesman Stephen Lloyd has called for a ban on contingent charging for advice on pension transfers following the scandal surrounding the British Steel Pension Scheme (BSPS).
Last month, the Work and Pensions Committee revealed members of the BSPS had been “shamefully bamboozled” as dubious advisers exploited BSPS members for personal gain” with the help of “parasitical introducers”. The advisers used contingent pricing, which means they will only take a fee if the transfer goes ahead. This led to them pushing the transfers, often against the interests of the members, the Committee said.
Lloyd, therefore, believes the practice of contingent charging of pensioners for advice on pension transfers by financial advisers is “against the public interest” and should be banned. He believes it is impossible for an adviser to act in the interest of consumers by giving completely impartial advice, when the adviser only gets paid if the consumer chooses one outcome.
“While the vast majority of advisers seek to act honestly and in the interest of clients, the distress caused to many British Steel pension workers recently shows that there are rogues in every industry. One of the roles of government is surely to protect consumers from such sharp practice. This is especially true when people’s hard-earned retirement savings are at stake,” he said.
Lloyd noted that many financial advisers have denounced contingent charging and the Financial Conduct Authority (FCA) has described the practice as “a higher risk approach.” On the issue of contingent charging, as well as a plan to strengthen the ban on cold calling, Lloyd said the FCA are “the only show in town” in terms of their expertise in these areas “and shouldn’t feel they have their hands tied by politicians if they want to take action.”
“On the current Financial Guidance and Claims Bill wending its way through parliament, it is currently in committee stage, the Liberal Democrats have been pushing hard for all pensions and claims management cold calls to be banned.”
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