The Work and Pensions select committee is calling on the regulator to devote more resources to pension scams after it emerged that unscrupulous advisers are fleecing pension savers
The Work and Pensions select committee is calling on the financial regulator to devote more resources to pension scams after it emerged that pension companies are swindling billions from customers.
A parliamentary inquiry has found that unscrupulous advisers are fleecing pension savers out of £2 billion in unnecessary fees and charges. The hard-hitting report revealed that out of 3,700 staff at the Financial Conduct Authority (FCA) only 10 people were working on its dedicated pension scam team.
The committee recommends that the FCA reviews the resources it dedicates to combating pension scams.
It also highlighted the problem of “phoenix firms” that voluntarily go out of business to avoid compensation claims against them and then simply reappear under a new name.
It says the FCA’s list of unauthorised firms should be expanded into a widely publicised database which should be regularly updated by the range of governmental organisations involved in pension scams to act as a co-ordinated early warning system.
While MPs recognise that many independent financial advisers provide good value for money for pension customers, they say the number of people paying for good value advice is low.
The FCA denied that there were not enough people working on pension scams.
An FCA spokesperson says that while there are 10 full-time dedicated permanent staff working on this, overall they currently have over 100 full-time staff working on pension scams and similar issues.
MPs are also calling on the government to force pension providers to clearly declare all charges facing savers.
The committee says it remains “unconvinced” that the industry will rise to the challenge of providing clear, transparent information to pension schemes about the costs and charges of investments.
Frank Field MP, chair of the committee, says that ripping off pension savers could be eliminated. The select committee is calling on the government to shine the searchlights into that part of the financial industry that has settled down to misinforming, mischarging, overcharging and making a fat living off the hard-earned savings of pensioners.
Field said government and regulators should not wait for the industry to fail to act voluntarily as they have so many times in the past. It must put the full force of the law behind such changes.
A spokesperson for the Department for Work and Pensions says that they have taken decisive action to limit charges and make the costs of saving into a pension more transparent.