Bailey’s FCA failed to stop misselling that ‘robbed thousands’

BANK of England Governor Andrew Bailey has been criticised for failing to protect thousands of savers from “systematic mis-selling” that lost them millions of pounds in retirement savings.

City watchdog the Financial Conduct Authority was “unprepared” for 2015 pension reforms and failed to protect British Steel pension scheme members from “unscrupulous financial advisers”, MPS said in a report today.

Mr Bailey took charge of the FCA a year after the reforms came into force but the public accounts committee found the regulator was “consistently behind the curve” and failed to get to grips with problems under his watch.

Dame Meg Hillier MP, chairman of the public accounts committee, said: “The head of the FCA at the time, Andrew Bailey, stressed to the PAC that these were the ‘most complicated financial decisions a person could make in their lifetime’ – so how was it that even with two years’ lead time the organisation was unprepared: first for the systematic mis-selling that robbed thousands of their life savings and retirement plans, then in coming up with a redress process that is hard for those affected to navigate?”

Final salary pensions of the type British Steel pensioners had guaranteed an income based on years of service as a percentage of a retiree’s salary.

Pension freedoms brought in by George Osborne, chancellor at the time, in 2015 mean that owners of so-called gold-plated pensions could sell them for a lump sum. This is usually a poor deal for most people, unless they are particularly wealthy and wish for a lump sum to be passed on as inheritance.

British Steel pensioners were persuaded to ditch their protected final salary pensions in favour of risky, speculative schemes. Poor advice was so widespread that the committee felt compelled to investigate it.

Some 7,800 steelworkers lost an average £82,600 in life savings, with some losing up to £489,000, the public accounts committee found.

Nick Smith MP, the lead member on the inquiry, said: “Steelworker pensioners came to me four years ago telling me they had been ripped off and were worried that no one was there to help. This report shows how badly they were treated, and where the FCA failed to support them in their hour of need.”

Financial advisers earned large fees by herding savers away from safe schemes and into risky ones, which collapsed in value.

The FCA was ill-prepared for the scandal itself and was “consistently behind the curve”, the report found.

Mr Bailey was in charge of the FCA from 2016 until 2020 when he left to head up the Bank of England.

The FCA said: “The circumstances around British Steel Pension Scheme transfers were exceptional, and we know that many members lost out due to poor advice. We will carefully consider the recommendations of the report and respond to the committee.”

It proposed a £70m scheme to compensate pensioners, it added, and oversaw the closure of 700 advice firms. The Bank of England did not comment.

Separately, Port Talbot steelworks owner Tata Steel UK said it returned to profit last year but warned of a “highly uncertain” 2022 as high energy and borrowing costs threaten to choke off demand. It posted an £82m pre-tax profit after a loss of more than £333m in the previous year.