British Steel workers to receive payouts after being given bad pension advice by financial advisors
Financial advisers will be forced to compensate thousands of British Steel workers for wrongly advising them to ditch their company pension plans.
Industry watchdog the Financial Conduct Authority (FCA) yesterday told advisers to ensure that they have the money to pay out claims from those given ‘unsuitable’ advice.
The claims are from workers who were told to switch out of valuable pensions linked to their salary and move into inferior and riskier plans.
Compensation: Industry watchdog the Financial Conduct Authority yesterday told advisers to ensure they have the money to pay out claims from those given ‘unsuitable’ advice
This advice would typically have resulted in rewards for the advisers – but left the steel workers facing a poorer retirement.
The British Steel Pension Plan scandal arose in 2017 when the scheme was restructured after the sale of the business by owners Tata Steel.
Some 7,700 members were transferred out, many of them having been targeted by opportunistic and commission-hungry advisers.
Earlier this year the FCA examined the recommendations given to 192 workers and found that just a fifth of them had been given suitable advice.
In 47 per cent of cases, the guidance was unsuitable.
And in a further 32 per cent of cases, the advice contained ‘information gaps’, the FCA said.
It added that the level of bad advice that was given to the British Steel workers was ‘highly exceptional’.
And yesterday it warned advisers not to try to avoid their liabilities to workers by selling down assets, saying it would take action if they did.
It also urged former members of the pension scheme to check whether or not they had received unsuitable advice and raise a complaint.
Members are thought to have lost hundreds of millions of pounds’ worth of retirement income through the scandal.
But workers complained that the watchdog had done too little too late, prompting calls for a probe into its actions.
Parliament’s spending watchdog, the National Audit Office (NAO), said in October that it would investigate the FCA’s response to the affair.
Members moved around £2.8billion in total out of the British Steel pension scheme.
The NAO will look at what the FCA did to regulate advice to British Steel workers, its plans for supporting those owed compensation, and how much compensation is being delivered.
It is expected to report back in the spring.