Rogue U.K. Pension Advisers to Face Jail Under Proposed Laws

(Bloomberg) -- British financial advisers and pension managers face jail and increased fines under proposed legislation announced during the Queen’s Speech to mark the new parliamentary term.

Penalties for the most serious offenses will carry a maximum sentence of seven years and a 1 million-pound ($1.26 million) fine, according to a briefing note that accompanied a speech read by the Queen to British lawmakers on Monday.

The Pensions Regulator wants extra sanctions to protect savers and deter misconduct or scammers targeting pension pots being transferred between providers. There were 100,000 transfers out of accounts that offered a promised return, so-called defined benefit pensions, in 2017-2018, the briefing note said.

In July, the regulator said 69% of consumers advised to transfer would have been better off not moving their accounts.

The Pension Schemes Bill outlined Monday by the Queen would also hand new powers to the regulator to force operators to disclose more plan information, according to the briefing note.

Missing from the proposed legislation was mention of a regulatory framework for newly created private equity backed pension funds. Frank Field, chairman of parliament’s Work and Pensions Committee, wrote to ministers in the past few months asking for rules to be put in place before two so-called superfunds begin operation.

The Pension SuperFund is backed by Disruptive Capital Finance, while Clara Pensions Ltd. is supported by TPG Sixth Street Partners. Both funds plan to acquire defined benefit plans from existing company managers.

The government also announced plans to simplify fund distribution rules, making it easier for overseas investment funds to be sold to U.K. based investors. The move was welcomed by The Investment Association who said it would benefit savers.

To contact the reporter on this story: Benjamin Robertson in London at brobertson29@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Marion Dakers

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