The FCA has now urged steelworkers to claim against their pension advisers.
7,700 steelworkers who transferred out of their British Steel Pension Scheme (BSPS) are being encouraged by the FCA to lodge a claim against their financial advisers.
Last month, the financial watchdog found that nearly half of the BSPS pension transfers in 2017 were unsuitable. This was part of a market-wide study into the suitability of defined benefit (DB) pension transfer advice, with the FCA looking at 192 cases of transfers out of the BSPS.
It found that 47% of cases were unsuitable for transfer. The FCA wrote to steelworkers and said:
Our findings are sufficiently concerning that we have taken the formal step of contacting you directly and encouraging you to act.
You should check the advice you were given and, where appropriate, complain in order to seek any compensation you are potentially due.
Megan Butler, Director of Supervision, reiterated that the FCA recognise the distress caused by the BSPS situation. She stated the FCA would take action against the advisers that have provided poor advice.
What happened with British Steelworkers’ pensions?
Issues first began to emerge in 2016 when British Steel owner Tata was looking to sell the business. The pensions scheme had to be separated from the business due to its large deficit. The Government and the Pensions Regulator allowed the formation of BSPS 2 which would offer members lower annual increase to their pensions.
Members were only given until the end of 2017 to decide whether they wanted to switch to BSPS 2, move to the Pensions Protection Fund, or transfer out of the scheme. Many members decided to transfer out of the scheme after receiving independent financial advice.
Unions at the time, however, were very concerned that financial advisers were offering unsuitable advice and targeting the steelworkers.
In October 2018, Nick Smith, MP for Blaenau Gwent, a place where many constituents where embroiled in the ongoing scandal, said:
We have a system of pensions and financial regulations that fails to protect hard-working people. The chancellor needs to put this right and to get on the side of the working people.
We also need stricter penalties, better information and far tighter oversight.
Figures around the same time showed that the FSCS had paid out £40m in compensation relating to poor defined benefit pension transfer advice, up from £20m in 2016. Smith added:
Many people – including my constituents – ended up losing thousands of pounds of hard-earned money because of poor advice they were given.
How can Smooth Commercial Law help?
Have you been mis-sold a pension or investment product? Smooth Commercial Law may be able to help you claim compensation.
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent, fraudulent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.