The lessons from the British Steel Pension Scheme debacle will reverberate for a long time but I wonder if the recent criticism of the regulators is just another knee-jerk response to a financial mess which could well be repeated.

This week a new independent report into the BSPS debacle, authored by former Money Advice Service CEO Caroline Rookes, heavily criticised the regulators including the FCA and TPR.

It called for a review of regulators’ website content and demanded the FCA and SFGB review their registers to make them “fit for purpose.”

This is helpful but the reality is there was systemic failure across the pensions sector here, not just the tardiness of the regulators to blame.

It’s worth recapping what happened because the circumstances are still not clear to many. Essentially members of the British Steel Pension Scheme were told they had to shift their company pension elsewhere. Some of these pension pots were worth hundreds of thousands of pounds and it wasn’t long before ‘vulture’ advisers began circling.

With such rich pickings a number of dubious ‘adviser’ firms rushed towards what they saw as a goldmine. Many poor transfers took place with the BSPS victims suffering potentially huge losses as they shifted their pensions into unsuitable schemes.

In hindsight the warning signs were missed early on but let’s not forget most of these adviser firms, as far as we know, were authorised and regulated.

Whether the regulators can ever prevent unscrupulous individuals setting up financial firms with the main intention of ripping people off is a moot point. The headlines and regular compensation claims against the Financial Services Compensation Scheme suggest not.

But others are culpable here too. What were the employers doing allowing long-serving and hard working staff to transfer their pensions out to any tom, dick or harry? The vultures would not have picked the bones clean if they had not be able to access the funds in the first place.

And what about the pension firms that accepted the transfers? I cannot believe many of these, where they were reputable organisations, did not suspect there was something wrong.

Ms Rookes deserves recognition for a comprehensive and detailed report which unearths many failings but scapegoating the regulators is not the only answer here.

A key question is how to stop it happening again and it’s clear that safeguards and protections surrounding pension transfers must be improved across the board.

It cannot be right that a worker with limited knowledge of pensions is allowed to transfer their entire retirement nest egg to a firm they know little about via a mechanism they barely understand.

I can see a role here for an independent, consumer-focused advisory body which steps in to independently reassess any pension transfer in similar circumstances - a pension referee if you like, highlighting risks and costs. Workers would be compelled to see this body to discuss their plans before making a transfer. This ‘pause’ for thought might make all the difference.

With BSPS this role of impartial adviser was filled by many generous and dedicated Financial Planners acting as volunteers but the British Steel workers, and others like them, deserve much better and in cannot be down to a few charitable planners to save the day.

Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with over 30 years of experience. He previously worked for the Financial Times Group and in daily and weekly newspapers. 

Follow @FPT_Kevin