Andrew Bailey, then head of the Financial Conduct Authority, fell asleep during a meeting over what would become one of the UK’s biggest misselling scandals, according to attendees who urged regulators to act more quickly to protect those affected .
Bailey, now governor of the Bank of England but FCA chief executive from 2016-2020, is said to have dozed “many times” during the September 2019 meeting with advocates from thousands of members of the former British Steel Pension Scheme.
The campaigners urged the regulator to improve compensation schemes for BSPS members, who they say could be eligible for hundreds of millions of pounds as victims of mis-selling.
The allegations against Bailey came when a prominent MP accused the FCA, which has been criticized over several other matters in recent years, of “falling asleep at the wheel” for the way they handled the scandal.
Al Rush, a financial advisor who represents BSPS members and attended the meeting, said: “Bailey kept falling asleep. We were trying to get a serious point across.”
Philippa Hann, an attorney at law firm Clarke Willmott who also attended the meeting, said: “We felt strongly that the FCA was not doing enough for the steelworkers. We were happy to talk to Bailey, but there were a number of times when his head fell and he had his eyes closed and he seemed to be asleep. It was very strange.”
A spokesperson for Bailey, who became BoE governor in 2020, declined to comment on the allegations, but added: “He completely and categorically rejects any suggestion that he is not taking seriously the issues raised by those involved. took.”
“Andrew devoted an enormous amount of time to BSPS and ordered a large-scale investigation into the matter by the FCA.”
The BSPS participants owed defined benefit plans, which provide a guaranteed level of income upon retirement. FCA guidelines state that a consultant should assume that accepting a lump sum of cash for future retirement benefits will not be appropriate for most.
But from 2017-2018, around 8,000 BSPS members transferred their pensions, worth a total of £2.8 billion, to riskier defined contribution plans, after taking advice from independent financial advisers.
The FCA found this advice inappropriate in 47 percent of cases and unclear in another 32 percent.
A National Court of Auditors’ inquiry into the BSPS case, published on Friday, concluded that BSPS members suffered “significant financial losses” because the regulated market for financial advice “failed to protect them”.
The parliamentary spending watchdog found that 263 pension plan participants had been under-compensated by around £18m to date because financial advisers had gone into liquidation and there were limits to the amount that could be provided after that.
The average loss for BSPS claims so far resolved by the Financial Services Compensation Scheme, the lifeboat fund for customers of failed businesses, has been £82,600, with individual losses ranging from £0 to £489,000, the NAO said.
“The handling of the BSPS case was a head-to-toe failure,” said Meg Hillier, a Labor MP and chair of the House of Commons Public Accounts Committee. “Many of the pension consultancies gave bad advice to clients and the FCA, whose job it is to regulate these companies, was asleep at the wheel.”
The FCA said it welcomed the NAO report as it highlighted “the complex issues for government and regulators” arising from the exceptional circumstances surrounding a company-initiated restructuring of the BSPS in 2017 and the framework for a relaxation of pension tax rules in 2015.
“We recognize the damage these conditions have caused to steelworkers and communities, so we will continue to work to ensure that former members of the British Steel Pension Scheme who have lost out financially due to bad advice receive compensation,” the regulator said.
“We have taken drastic measures. † † to support them already and are preparing to discuss a consumer redress scheme for BSPS members by the end of March.”
The FCA added that it had already acted to raise the standard of pension transfer advice more broadly and issued £1.3 million in fines related to poor advice on the transfer of fixed benefits, while 30 enforcement investigations were still pending.
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