Frank Field, an influential MP, has criticised the financial regulator for the delay in the decision on whether to ban a model of charging for pensions advice. The delay is believed to have resulted in mis-selling to thousands of retirees.
The regulators have been alleged of turning a blind eye to pensions mis-selling after it decided not to ban a controversial fee arrangement that was seen by some as encouraging vulnerable workers to surrender their valuable retirement benefits.
The Financial Conduct Authority (FCA) said that it asked for views on whether to ban contingent charging, a model wherein a pension adviser will only be paid once their client acts on their advice and transfers a “defined benefit” pension fund to a riskier investment.
Even though the FCA said that the practice had resulted in higher charges for the pensioners, it said that it needed to collect further evidence on whether it should be banned outright or not.
Christopher Woolard, the executive director of strategy and competition of the FCA, stated: “Because of the significance of this issue to all stakeholders in the market, we will carry out further analysis and consult on new interventions if appropriate in the first half of next year.”
However, the chair of the Work and Pensions Committee Field demanded that the FCA takes quicker action in stamping out the practice that resulted in the pension mis-selling of hundreds of the steelworkers of Tata.
Field stated: “Pensioners were swindled out of their savings yesterday, are being swindled out of those funds today, and still will be tomorrow.” He recently stepped down as a member of the Labour party.
He added: “Yet the FCA fails to take effective action.”
He continued: “The FCA has buried this in the long grass, even as unscrupulous advisers are circling like vultures around consumers. It’s time the FCA took decisive action to prevent another mis-selling scandal.”