Key Facts

• Witnesses include Simon Wilson, interim head of resolution at FSCS; Casey McGrath, head of legal at FSCS; Sheree Howard, executive director of risk and compliance oversight at FCA; Robin Jones, director within the risk and compliance oversight function of FCA.
• The statement discusses an increase in pension mis-selling during the covid crisis.
• Typical cases involve transferring from a regular pension into a self-invested personal pension with high-risk investments leading to loss of savings.
• The Gloster report identified a range of issues and mistakes made by the Financial Conduct Authority (FCA).
• Significant changes have been implemented since the transfer of responsibilities from the Office of Fair Trading (OFT) to the FCA in 2014.
• Mini-bonds were unregulated, leading to difficulties for investors seeking compensation.
• The Government are considering changes to the financial promotions regime to improve consumer understanding.
• There is an increase in pensions scams, causing distress and potential loss of life savings.
• The FCA supports including online safety measures in the online harms Bill to mitigate risks from scams and fraud.
• The FCA has not held a meeting during LCF’s operation period but may have subsequently.
• The FCA considers consumer engagement and aims to serve the UK public effectively through information provision.
• Meeting individual consumers would be resource-intensive, but groups of consumers are met regularly.
• The Pension Protection Fund runs the Fraud Compensation Fund.
• The levy on industry schemes is currently set at 75p per member for general schemes and 30p for master trusts.
• A Government loan will be required due to historical cases of pension scheme fraud, with a proposed cost estimate of around £350 million.
• The Fraud Compensation Fund was set up as an industry-funded system.
• At the time of the judgment, the FCF had assets of £26.2m with expected unfunded liabilities of £200m to £250m.
• A loan is planned to resolve cash-flow issues while payments are made.
• The collapse of London Capital & Finance plc was investigated by Dame Elizabeth Gloster.
• Dame Elizabeth's report recommends a cultural change at the Financial Conduct Authority (FCA).
• The report highlights failings in the regulatory perimeter approach, holistic business review, and employee training within the FCA.
• LCF bonds were sold as ISA-eligible products, which was critical to attracting investment.
• The FCA and HMRC did not conduct any analysis of whether the product being marketed was ISA compliant.
• Dame Elizabeth suggests that implementation progress should be monitored closely.
• Witnesses are requested to be muted when not speaking.
• The Financial Services Act 2012 provides broad exemption from civil liability for the FCA, making it difficult for consumers to receive redress through legal means.
• Between the People’s Pension and NEST, approximately 37% of the Fraud Compensation Fund levy was paid in 2019.
• The current estimate for raising £350 million is significant considering that these two schemes represent roughly 1% of assets in the sector.
• The issue of catastrophic failure across the system is highlighted.
• There are recommendations in a report produced by the Work and Pensions Committee into pension schemes problems.
• Regulatory failure leads to catastrophic losses for people.
• The session closes earlier than expected.
• Nusrat Ghani invites the Government Whip to propose the Adjournment.
• Committee members are instructed to leave promptly by observing social distancing.