The Beeb and the Tata Steel Pension Scheme
A couple of weeks back, I wrote about the (then) almost impossible challenge for advisers wishing to provide good-quality, empirically-based advice to Tata Steel workers who are under considerable pressure to make decisions about their DB Pension Scheme benefits within a very tight timescale, and with incomplete information supplied by the scheme administrators. You may recall that our prevailing emphasis was one of caution - and since then there has been a positive explosion of media comment about this saga, none of it very complimentary to anyone who may have been drawn into the carnage. I have subsequently updated that blogpost with links to a spread of media comment which you may find helpful.
Of course the Beeb could not help themselves, and we were treated to the usual specious and half-baked commentary on BBC Wales. We were told that the entire problem was due to unscrupulous advisers who earn (so we were told) "substantial commissions". The Beeb's financial journalists have apparently never heard of the RDR. The heinous crimes of these firms were portrayed so loosely that one might conclude that every financial-planner or IFA would be equally guilty of this invidious misappropriation of Tata Steel workers' pensions. It was, however, a relief to be spared images of Fagin-like characters, clutching bottles of poison and briefcases labeled 'Financial Adviser', stuffed with banknotes - given the overall quality of the reporting.
Then, as one of the victims was being interviewed, the light began to dawn that the man had entrusted his retirement provision to an unregulated firm, rather than a bona fide authorised firm. At no point, did the journalist question the wisdom of such an approach, but effectively fomented the vocal outrage for maximum effect. One might as well ignore the NHS and entrust one's vasectomy to a complete stranger with a moderately sharp knife - there must surely be a world where it is actually reasonable (and therefore not unfeeling) to question the sheer irrationality of people's decisions. But no, the inevitable poor outcome was the 'fault' of financial advisers. Someone else must be blamed.
It is a marvel that unregulated firms are able to operate in this kind of way. The firm in question, Celtic Wealth Management, looks like a regular intermediary firm, but it isn't. It acts as an introducer to other advisers which are regulated, but the very name of the company begs the question: what wealth is such a firm capable of managing, given that it is unauthorised? And if it derives its income by sharing in the spoils generated by transactions resulting from its introductions, what is the probability that the poor Tata Steel employees are going to experience less-than-favourable outcomes? As an absolute minimum, such a model is almost bound to result in consumers being overcharged, given the pressing needs of introducer and introducee.
It all stinks. It stinks that firms such as this are still, after decades of regulation, able to get away with such practices. It stinks that consumers might think it perfectly reasonable to entrust their retirement security to the tender ministrations of an unregulated firm. It stinks that Tata Steel put its employees under the cosh with unreasonably tight timescales and inadequate information. And it stinks that uncritical and unsophisticated journalism should (apparently) think it acceptable to tar an entire profession with the same brush. Clearly, there is guilt by the merest association here: ValidPathers should continue to exercise great caution.