Saints or scoundrels - who’s giving your employees financial advice?
British Steel employees targeted by “vulture” financial advisers
That was the verdict of the Work and Pensions Select Committee in February 2018, who concluded the pension scheme’s 130,000 members lacked adequate protection from the employer, trustees, regulator and government alike.
The circumstances were extreme. Following a restructuring of the defined benefit pension scheme, 130,000 members had to choose whether to stick with the scheme (which was going into the Pension Protection Fund), transfer to a new British Steel scheme, or transfer externally. Timelines were tight, and there simply weren’t enough financial advisers available in the UK to offer the necessary advice.
Members were desperate for help, and became easy prey for a small minority of rogue advisers, who pressured them to transfer externally. Some members reportedly lost as much as £200,000.
Of course, such stories entirely over-shadowed the good advice that was given to a far larger number of scheme members, either through the scheme-appointed adviser, or other advisers that members found themselves.
The choice for employers – tackle or run scared?
Equally tragic, will be if employers now run scared of helping their employees find good financial advice, fearful of making a mistake.
British Steel didn’t suffer this scandal because it encouraged financial advice. It suffered it because it didn’t do enough to secure good advice for every employee, leaving the door open for unscrupulous advisers to succeed with direct approaches to employees.
Employers must review how they signpost towards advice
While few employers will experience a situation like this one, there is a learning that every employer should heed. In many cases, British Steel employees found or checked these rogue advisers on both the FCA register and other long-standing directories, which many employers and trustees refer employees to.
Often, such directories undertake only limited checks on the advisers they list. And it’s often years since an employer, trustee or pension provider last reviewed which adviser directories they direct people to. In that time, the landscape of adviser directories has changed markedly.
VouchedFor is running more checks on advisers than any directory
We launched VouchedFor.co.uk in 2012 to provide a better way of finding an adviser you can trust. Our key differentiator is our ratings and reviews from advisers’ clients. Over 90,000 people have now reviewed their adviser, and nearly 2m people use the website each year.
We don’t stop at ratings and reviews. We undertake more checks than any other adviser directory. Like many directories, we check every financial adviser has an active listing on the FCA register. But we also go far beyond this. The list below shows a list of all the additional checks that are unique to VouchedFor.
List of adviser checks unique to VouchedFor
- We check all reviews are from genuine clients
- We follow up with every enquirer to ensure satisfaction – of the 60% who respond, 88% have been contacted by the next day, and 71% of those intend to take things further
- We ask every enquirer to write a “first impression” review about the adviser – 87% give a 4 or 5 star rating
- We check whether the adviser provides independent or restricted advice, service by service
- We require advisers to upload certificates to evidence any qualifications
- We invite advisers to publish their fee information – 42% do so currently
- We monitor press coverage of all advisers, and remove any where we doubt their integrity