Thousands of former steelworkers who lost thousands of pounds when they were given unsuitable advice about their pensions are to get compensation, the Financial Conduct Authority has said. Many were poorly advised to transfer their savings out of the British Steel Pension Scheme (BSPS) by advisers who received financial incentives if people left the scheme.
The Financial Conduct Authority (FCA) found that almost half (46%) of the advice it reviewed relating to BSPS was unsuitable, something that was described as 'one of the biggest financial rip-offs of working people in south Wales'. A scheme announced on Thursday, March 31, will cover those who transferred out between May 26, 2016 and March 29, 2018. If it goes ahead, the FCA will publish rules setting out how advisers must determine whether they gave unsuitable advice and whether they must pay compensation. Independent checks and monitoring will be put in place to ensure that firms comply with the rules and consumers can be confident in the outcome of the review.
If confirmed, the scheme is expected to be in place by early 2023, with consumers starting to receive compensation from late 2023. The Financial Services Compensation Scheme will consider claims from individuals who received advice from an insolvent business or one which no longer exists.
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Consumers can make a complaint now rather than waiting for the outcome of the consultation. Information is available on the FCA’s website.
Sheldon Mills, Executive Director for Consumers and Competition at the FCA, said: “The circumstances around British Steel Pension Scheme transfers were exceptional, with former members receiving significantly higher levels of unsuitable advice compared with other cases. We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme.”
Blaenau Gwent MP Nick Smith said: "It's been like pulling teeth to get to this point, but I'm very glad to hear that the Financial Conduct Authority will be delivering a redress scheme for steelworkers. I have been working with steelworkers and campaigners on this for four years now and I know the toll it has taken on so many.
"I have been pushing for a redress scheme because I believe this is the best way to put things right for the steelworkers that were targeted by pension sharks. I’ll be looking at the details of the scheme to see if further improvements are needed and will get a chance to speak with the regulators again at a Public Accounts Committee hearing on April 27.
"This is a positive step forward in putting this injustice to bed. I still want to see those responsible for this scandal suitably punished, not just the rogue advisers but also their introducer accomplices."
