Britain’s financial regulator has outlined plans for a £71.2m compensation scheme for 1,400 British Steel workers who were misled by financial advisers on their pensions.
The Financial Conduct Authority (FCA) said advisers had duped members of the British Steel Pension Scheme (BSPS) to transfer out of the fund into higher-risk schemes while they raked in lucrative fees.
An investigation of the scandal involving workers at the Port Talbot steelworks in south Wales between May 2016 and March 2018 showed about 46% of the advice given by advisers was “unsuitable”.
The FCA said it would take strong action against firms that tried to avoid paying compensation. It has frozen the assets of one firm and is investigating 30 individuals or businesses related to BSPS.
Advisers have been able to avoid compensation payments by closing their businesses.
In these cases claimants have been forced to apply for redress from the industry-funded Financial Services Compensation Scheme (FSCS).
The scheme has received about 1,300 claims and paid out £37.3m in BSPS claims. About £15m has also been paid to former BSPS members after the FCA ordered firms to review their previous business.
“The circumstances around British Steel Pension Scheme transfers were exceptional, with former members receiving significantly higher levels of unsuitable advice compared with other cases,” said Sheldon Mills, FCA executive director for consumers and competition.
“We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme.”
