Snog Marry Avoid
It almost feels as if I have reached a kind of cultural low point for ValidPath, in instinctively citing this BBC programme title, but in the circumstances it feels almost inevitable. I sincerely hope that this road accident of a TV show would never be on any ValidPather's Top 10 WatchList, in the same way that I hope that no ValidPather would happily get involved in the following area of advice.
I am referring to the British Steel Pension Scheme. You may already have read about this particular ticking time-bomb - in both FT Adviser and New Model Adviser. For most of us, the kinds of warning implicit in these articles really ought to be enough. We know too little about BSPS 2 in order to be able to reliably advise Members of the old scheme, and there is a high probability that DB Pension Transfer Specialists (PTS) will have insufficient information supplied to them in respect of preserved benefits within the old BSPS to be able to make a reliable comparison.
Living in South Wales, I have followed the developing news regarding the fate of BS workers and their pension rights with gathering concern, but it was not until last week that I had intimations that the FCA were attempting some kind of response. Last Thursday I received, by email, an invitation from the FCA to attend a special event in Swansea, focused on DB Pension Transfer Advice. No it wasn't an invitation, it was more of a polite demand. As it happened, I already had a commitment on that day (the 21st) in a very different part of the UK, so I wrote back, apologised that I would be unable to attend, and mentioned the not insignificant issue of notification, and commitments in the diary. I asked for copies of the presentations and notes for the event - which I have subsequently been informed will not be available. If you follow the links to those two articles, you will discover that the Swansea event was primarily about this issue, and you will also receive enlightenment from advisers who attended if you look at the comments.
Sometimes in life, one encounters circumstances where there is actually no good outcome for any of the parties involved. For the poor BS workers, the options available to them are not only profoundly disappointing, but the circumstances surrounding them (not least the timescales for decisions) are almost impossible to navigate. The potential for biased and unsuitable outcomes is immense - people with practically no experience of investment will be presented with what looks like a large transfer value, and they will have no context or standard in their minds against which to view all those zeros intelligently. And for advisers who get sucked into this whole mess, there is - in our opinion - only one possible outcome. Given that no TVAS that could be issued at this point in time could be regarded as reliable, any advice (one way or the other) is meaningless, and will - with a sense of crushing inevitability - end up in an upheld complaint, with substantial redress being paid. Indeed, one might conclude that the administrators of the BSPS are counting on it. They know how the regulatory infrastructure works, with all of its profound dysfunctionalities and injustices, and they have devised a scenario which means that unwary advisers will pay their whack.
There is another aspect to this case which is worth emphasising. Given that it will be (at the present time) impossible for the PTS to generate a meaningful TVA Report, you would think that this would be the end of the matter. Yet there are, apparently, people out there who are still prepared to play the game, intent on trying to find some way in which the figures might be sufficiently fudged to produce the magical piece of paperwork. But the mere existence of a TVAR is not enough: it has to mean something, the analysis has to be significant and reliable. Financial advice is much more than simply about papering a file - and that is important not just for the client, but also for the adviser's sense of professionalism and self-worth.
Snog Marry Avoid? Only the third option is the sane one.
One of our ValidPath PTS's has confirmed that she does now have access to (a) detailed granular data relating to the old BSPS, and (b) the specific revaluation rates applying to BSPS2. This means that the three key DD components are in place: (1) reliable/accurate data, (b) a meaningful TVAS, and (c) a verifiable output which can be used for the purpose of conclusions.