A year in retirement: DB transfers, SIPP claims and British Steel

Hannah Godfrey reports...

From SIPP litigation to defined benefit (DB) transfer tribulation, Retirement Planner looks back at the most important stories emerging from the retirement sector over the course of 2018.

SIPP claims blamed for additional FSCS levy

2018 kicked off with an issue that would raise its head again and again over the year – rising self-invested personal pension (SIPP) claims. In January, the Financial Services Compensation Scheme (FSCS) issued an additional £24m levy demand, citing the rising number of SIPP claims as the reason – but this would not be the last time the lifeboat fund asked for more money. In November, a ‘supplementary-supplementary’ levy of £69m was requested from the lifeboat scheme due to – that’s right – additional SIPP claims.

Aegon and PensionBee have a row

Service standards and technology – of which more, much more, in our upcoming ‘Year in platforms’ review – lay at the heart of the spat in early February that saw Aegon and PensionBee taking potshots at one another in the press. PensionBee fired first, accusing Aegon of taking 54 days to complete a pension transfer, and, not shying away from the limelight, set up a public ‘tracker’ that revealed nearly 900 customers were stuck between the two providers. Aegon eventually shot back, arguing it completes the “vast majority” of its pension transfers electronically within 10 to 12 days.

British Steel firm enters liquidation

Also in February, Active Wealth UK, the most prominent name in the British Steel saga, and one that dominated headlines during the final months of 2017 and early 2018, entered liquidation. This development was the first of a series of events where various firms connected to the beleaguered British Steel employees fell into liquidation or pulled out of the pension transfer market.

‘No-brainer to transfer’

March saw RP’s sister publication Professional Adviser exclusively reveal the extent to which the steelworkers had been misled, and the appalling “advice” they received from Active Wealth UK. The men’s stories were shocking, with accounts of being asked to fill in risk questionnaires to “keep the Financial Conduct Authority (FCA) happy”, and that It was a “no-brainer” to transfer out of their DB schemes.

Carey Pensions ‘in bed with scammers’

Back to SIPPs and Carey Pensions found itself in hot water when it was accused of being “in bed with scammers” during a case before the High Court. Carey was alleged to have mis-sold a lorry driver a SIPP that contained unregulated investments in store pods that were purchased after a chat with a Spain-based unregulated introducer. The outcome of the case is still unknown but is likely to have a profound impact on the SIPP market if the judgement goes against Carey.

FCA changes its mind

March also saw the FCA U-turn on plans to drop the ‘unsuitable’ assumption on DB transfer advice. The regulator stated its recent supervisory work had presented “significant evidence of unsuitable advice being provided” and, as such, the regulator felt it inappropriate to change the assumption.

MPs: ‘Scrap the LISA!’ 

The summertime brought yet more embarrassment to a perpetually embarrassed/embarrassing government. In July, the Treasury Committee called on the government to abolish the lifetime ISA just 16 months after it was first made available. The savings product has, however, yet to be scrapped.

A new British Steel narrative

August brought a change in the ongoing British Steel narrative. County Capital Wealth Management, which trades as The Pension Review Service, became the first firm that had lost permissions after advising steelworkers to re-enter the pension transfer market. In an interview with Professional Adviser, managing director Mark Abley said the firm had been through a “thorough” process with the FCA, adding it was one of the toughest challenges he had ever faced.

Major blow for the SIPP sector

November delivered the year’s first major blow to the SIPP sector as Berkeley Burke lost its High Court appeal against a judgement in favour of the Financial Ombudsman Service (FOS). Berkeley Burke was fighting a 2014 ombudsman decision, in which the FOS ruled the SIPP administrator had to compensate a client after it failed to carry out appropriate due diligence on their investment. Berkeley Burke persistently argued it carried out the due diligence required of it at the time; the FOS disagreed. Soon afterwards, Embark Group CEO Phil Smith warned the ruling would lead to “ambulance chasers causing chaos in the market“.

Dashboard not doomed

With a view to rounding off our year in retirement on a more positive note, December saw the Department for Work & Pensions (DWP) finally give the go-ahead for a gradual roll-out of an industry-funded pension dashboard. There were moments during 2018 when it looked as though the dashboard was doomed, and though the DWP’s report lacked any firm dates as to when the dashboard might get off the ground, commentators and industry experts appeared pleased to hear the government had at long last fired the starting gun on the project.