Personal pensions updates
Sign up to myFT Daily Digest to be the first to know about Personal pensions news.
UK regulators are to travel to the Welsh industrial town of Port Talbot to meet thousands of steelworkers suspected of being given bad pension advice and now eligible for compensation.
The event, led by the Financial Conduct Authority, will take place in September in the small seaside community, which became the centre of a major pension transfer mis-selling scandal in 2017.
The FCA, alongside the Financial Ombudsman Service and the Financial Services Compensation Scheme, will speak to individual steelworkers as a six-year compensation claims’ deadline draws in.
At least half of 8,000 former British Steel Pension Scheme members are suspected of being provided with unsuitable advice to transfer secure defined benefit pensions to riskier arrangements. Those targeted could be in line for tens of thousands of pounds in compensation.
“We would like to speak to steelworkers at the event to make them aware of their right to complain if they are unhappy with the financial advice they were given involving the British Steel Pension Scheme,” said the FOS, which settles complaints between advisers and their clients.
“We appreciate the distress this issue is causing and are committed to progressing BSPS cases as quickly as possible.”
The mis-selling occurred after The Pensions Regulator allowed BSPS to be spun off from Tata Steel, its struggling sponsoring employer, in 2017.
As part of the restructuring, 42,000 members of BSPS were given three months to decide whether to switch to a new BSPS plan, or have their benefits moved to the Pension Protection Fund, both of which involved pension cuts.
The unretired were given the third option to swap their secure benefits for a cash lump sum and transfer to a riskier arrangement, a move that legally required advice to be taken for sums worth more than £30,000. About 7,700 took the transfer.
In a 2018 report, the Work and Pensions Committee expressed concern that support provided to British Steel scheme members having to make complex decisions had been “woefully inadequate”, and that they had been vulnerable to unscrupulous advisers.
It also criticised the FCA for having done “too little, too late” to address concerns about the suitability of advice given to those considering a transfer.
Last June, the FCA said a file review of advice provided to BSPS members found that only 21 per cent of transfer recommendations appeared to be suitable.
To date the FOS has received 438 BSPS complaints and has settled 43 with nearly nine in 10, or 88 per cent, of cases awarded in the customers’ favour. This compares with an uphold rate of 58 per cent for non BSPS transfer complaints.
The FOS, which can award up to £160,000 for pension transfer complaints, said it did not keep records of redress paid by firms it found against.
The FSCS, which steps in to deal with complaints when a company has gone bust, has awarded about £10m in compensation to 250 BSPS members for poor transfer advice, with an average payout of £40,000 per claim.
“What we are not seeing is more steelworkers coming forward,” said Caroline Rainbird, chief executive of the FSCS.
“So we would encourage those who haven’t to contact, either ourselves or the ombudsman.”
Rainbird said similar one-to-one sessions may be held at other sites for former members of the BSPS, in England and Wales, who are still employed by Tata.