Britain`s markets watchdog was accused on Wednesday of being an "archangel with feet of clay" for not dealing faster with concerns that steelworkers are being "ripped off" over their pensions, lawmakers said on Wednesday.
Steelworkers in South Wales and northern England must decide what to do about their 15 billion pound ($20 billion) British Steel pension pot. They face a multitude of advisors and "introducers" touting for business, some offering a free meal to win business.
The steelworkers must transfer to a new scheme or join a pensions lifeboat, the Pension Protection Fund, following the closure of their current pension scheme.
"What have you been doing to actually get hold of the crooks?" Frank Field, chair of parliament`s Work and Pensions Committee, asked Megan Butler, executive director of supervision at the Financial Conduct Authority (FCA).
Was the FCA "knocking on doors" to catch the "cowboys" and end the "horrors going on in the streets"? Field added.
Butler said four financial advisors have stopped offering advice after the FCA intervened, with visits being made by a team of eight supervisors to several more. It held four seminars with advisory firms, and is holding public meetings this week.
"We can and do act," Butler said.
Over 12,000 steelworkers have asked advisers for a transfer quote, with 2,200 transfers made or in progress from an eligible pool of 38,000 pension members.
The aim is to "cauterise" immediate harm ahead of "phase two" when compensation may be paid to people given bad advice, Butler said.
"It sounds like a gentle tap on the wrist to me," a committee member said.BIG FEES
Some transfers involve sums up to a million pounds, meaning big fees for advisers, and Butler said there was evidence of a "high level of confusion" about transfer choices.
Field criticised Butler for not remembering off hand the names of the four advisory firms that can no longer advise the steelworkers.
"There is something desperately wrong at the centre of the FCA that it operates like this," Field said.
With the help of aides at the meeting, Butler named three of the four firms: Active Wealth (UK), Pembrokeshire Mortgage Centre, and Mansion Park. The fourth would not be named for the time being.
Lawmakers criticised Active Wealth (UK) and Celtic Wealth Management for not turning up to the hearing. Both had no immediate comment.
Pembrokeshire Mortgage Centre said it could not comment in detail due to ongoing FCA inquiries, but expected it will be shown that it acted properly and correctly at all times.
Mansion Park confirmed it was visited by the FCA and voluntarily stepped back from dealing with the steelworkers until it has received written feedback from the watchdog.
"Early indications are that some of our implementation processes may need to be reviewed and strengthened," Mansion Park said.
Unconnected to the FCA`s investigations, St James`s Place, one of Britain`s biggest financial advisers, said it would no longer accept new transfer requests from the steelworkers, but would complete those in the pipeline.
Lawmaker Stephen Kinnock, who represents some of the steelworkers, said separately that he will meet with FCA Chief Executive Andrew Bailey next week.
"I am increasingly concerned about the stories of unscrupulous advisers targeting the steelworkers and cheating them out of their pension money," Kinnock said in a statement.
($1 = 0.7501 pounds)
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