Almost half (47 per cent) of the advice given to former British Steel Pension Scheme (BSPS) members was found to be unsuitable, new analysis by the Financial Conduct Authority (FCA) has shown.

A further 32 per cent of the advice appeared to contain “information gaps”, while just 21 per cent was deemed “suitable”.

The analysis was published as part of a broader report the on defined benefit (DB) pension transfer advice market, which has also seen a number of regulatory updates introduced.

However, the FCA found that the percentage of unsuitable advice was higher for BSPS members than those in the rest of the sample, where just under a fifth of advice was deemed unsuitable.

As such, the FCA intends to write "directly" to the 7,700 former members of BSPS, for whom contact details are available, who transferred out previously.

It stated that this would help members to “revisit the advice they received” and to “complain if they have concerns”

The regulator has previously undertaken a number of actions designed to help those who transferred out of BSPS, including writing to almost 4,000 former scheme members to advise them on complaints procedures, and hosting a number of member facing events in Port Talbot.

The FCA confirmed that going forward, it would continue to focus on firms providing transfer advice, with work examining this sector set to continue.

Commenting on the report, Hargreaves Lansdown interim head of policy, Nathan Long, said: “There are plenty of high quality advisers, but they are dragged down by some poorer ones and as a result too much advice remains unsuitable.

“Almost half of the advice provided to people to transfer away from the British Steel Pension scheme was found to be unsuitable, this is quite frankly a horror show reminiscent of the 1990s.

“The rules to ensure the current workplace pension is being considered are spot on, but most people for whom this kind of transfer would be relevant are at the point of retirement so it may lack the desired impact.”

Alongside the specific findings and actions relevant for BSPS members, the FCA has also published its broader market update on the DB pension transfer market.

This includes a ban on contingent charging as well as other regulatory updates, and a ‘factsheet’ on DB pension transfers produced in conjunction with The Pensions Regulator.

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