Committee tells FCA to ban contingent charging

The Committee has told the FCA to ban contingent charging, which it claims is a “key driver of poor advice” in its report on the British Steel Pension Scheme.

“Genuine independence is not compatible with a charging model that only rewards advisers for recommending a particular course of action,” the report said.

The FCA has also been advised to create an online register of advisers and their current status in providing advice that does not require “a degree and orienteering skills” to use.

The Committee has also called on the government to bring forward proposals for a system of deemed consent in the long awaited white paper on DB pension schemes. This should enable the bulk transfer of members from a DB scheme, certain to enter the PPF, into an alternative scheme providing unequivocally better benefits than the PPF to those members.

The report said such a system would have been of benefit to many of the 25,000 BSPS members - many of them old and frail - who did not respond to the scheme consultation.

Since the Committee’s inquiries into BSPS began, the FCA has gradually picked off firms providing unsuitable advice to BSPS members, and announced a review of all UK firms providing DB transfer advice. The Committee welcomed this but said it is too late for BSPS members

In response, a TPR spokesperson defended itself and said it “fulfilled” its primary role by evaluating and approving this complex restructuring of the BSPS including obtaining £550m for the scheme.

“As part of this rare restructuring, which prevented the company becoming insolvent, a new pension scheme was offered to members as an alternative to entry to the PPF. We believe this was the best possible outcome for everyone involved in what was a very challenging situation, bringing greater certainty for thousands of scheme members.

“We also helped tackle unscrupulous financial advisers who were exploiting the situation and the current high transfer values available by working closely with the scheme trustees, the FCA and The Pensions Advisory Service (TPAS). We went to Port Talbot and took part in a discussion forum with scheme members and others.

“We reviewed communications sent to members and were satisfied they adequately warned of the dangers of transferring out of a DB Scheme. And, while TPR does not regulate financial advice, we wrote jointly with the FCA and TPAS to members to flag potential risks. We note the committee’s recommendations and are continuing to work more closely with the FCA to protect pension savers.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Is 2025 the year of the remortgage?
An estimated 1.8 million fixed rate mortgage deals are due to expire in 2025, 400,000 more than in 2024. This surge in remortgaging presents a critical opportunity for mortgage brokers to offer essential advice and financial support to homeowners across the UK, ensuring they transition smoothly to new deals amid stabilising interest rates and heightened affordability checks.


The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.

The UK housing market in 2024
The performance of the UK housing market in 2024 has largely exceeded many people's expectations, although challenges remain for first-time buyers due to house prices increasing and a testing rental market for many. Regional disparities, such as the North-South divide, also continue to influence housing accessibility and affordability for many buyers in pockets of the country.