Advisers linked to loan charge and pension scandals must be banned - Greg Wright

But what if these advisers and promoters are more interested in making a fast buck than your wellbeing?

What if they are willing to wreck your life to meet their sales targets?

Hundreds of steel workers are cursing the day a team of greedy advisers came calling in places like Rotherham.

They have had their retirement plans ruined after being advised to transfer from British Steel’s generous defined benefit pension scheme into less efficient products.

They made these decisions in a febrile atmosphere which the former MP Frank Field described as a “honeypot for scammers”.

The Financial Conduct Authority (FCA) has set out a package of long overdue measures designed to tackle weaknesses across the defined benefit (DB) transfer market.

The FCA said it will implement a ban on contingent charging in most circumstances, which will remove the conflicts of interest which arise where a financial adviser only gets paid if a transfer goes ahead.

Christopher Woolard, interim chief executive of the FCA said: “The proportion of customers who have been advised to transfer out of their DB pension is unacceptably high.”

The FCA is so worried about the problem that it is writing to around 7,700 former members of the British Steel Pension Scheme who transferred out. As the FCA letter states, many of them received unsuitable financial advice and could be entitled to compensation.

It added: “As the regulator of financial advisers, we have assessed a sample of the advice provided to former members and found that in only 21 per cent of cases we reviewed, the advice given appeared to be suitable. The remaining 79 per cent was either unsuitable, or unclear.”

In the letter, Megan Butler of the FCA, said: “We know the last few years have been distressing for many members of the BSPS, and this has not been helped by the actions of some regulated financial advisers. The FCA – along with The Pensions Regulator, Financial Ombudsman Service, FSCS and MaPS – remains committed to supporting you and taking action against any firms that are found to have provided poor advice.”

A report from the Work and Pensions Committee into the British Steel Pension Scheme described how “many BSPS members were shamelessly bamboozled into signing up to ongoing adviser fees and unsuitable funds characterised by high investment risk, high management charges and punitive exit fees”.

Does this type of aggressive and unethical behaviour ring any bells?

Victims of the loan charge scandal may well feel they were “shamelessly bamboozled” by advisers and promoters who became rich on their long-term distress.

Sir Amyas Morse’s review received chilling evidence of the tactics used by promoters to push people into using loan schemes.

These included misrepresenting the system to claim that schemes had been approved by HMRC, or providing opinions from Queen’s Counsel (QCs) suggesting that HMRC would not be successful if they tried to claim the tax.

The review also received “extensive evidence” that some advisers minimised the importance of HMRC opening enquiries by suggesting that this was normal. It’s hardly surprising their clients felt confident in continuing to use the schemes, only to be hit with a substantial tax bill years later.

The Morse review added: “It is to be expected that people will want expert advice on their tax affairs, and will turn to professionals for that advice. The review considers that the continuing marketing of loan schemes on the basis of tax benefits associated with them, given the clear legal position, is reprehensible.”

Each year brings a new scandal which shatters our faith in supposedly reputable advisers. In the most severe cases, these “professionals” should be banned for life.

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James Mitchinson

Editor