British Steel pension scandal: Savers could be compensated

Steelworkers collectively transferred £2.8bn from their pensions

British Steel pension savers are to be compensated if they were poorly advised to switch their pension pots.

About 8,000 steelworkers, many from Wales, collectively transferred about £2.8bn from the firm's scheme when it was restructured in 2017.

The Financial Conduct Authority (FCA) said it would deliver compensation worth £71.2m to those who were misled.

Most of these took advice from a financial adviser in the process, with these advisers regulated by the FCA.

The regulator said that close to half - 46% - of all the advice it had reviewed turned out to be unsuitable.

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Advisers will now be forced to pay compensation to those who received unsuitable advice and switched away.

Many steelworkers lost out when they switched their pensions

If the advisers have since gone out of business, the Financial Services Compensation Scheme will step in, with payments expected to start from the end of 2023.

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."

In a letter sent to advisers on Thursday, the FCA said: "Under the proposed redress scheme, firms which advised on British Steel Pension Scheme transfers would be required to review their advice.

"If the advice is unsuitable and resulted in a financial loss for former British Steel Pension Scheme members, the firms would be required to provide compensation."

It added that "failing to act on the requests in this letter" could allow the FCA to take action against the adviser.

"This is really good news, it is excellent news," said Philippa Hann, a solicitor representing steelworkers who welcomed the FCA announcement. "We have been calling for years for this to happen, so we are really pleased to see it finally under way."

Ms Hann is a partner at the law firm Clarke Willmott, which has represented more than 1,000 steelworkers and said "the majority are Welsh".

"We got involved in February 2018 and we have been working with over 1,000 steelworkers in relation to their claims of the bad advice to transfer out of what was essentially a gold-plated pension scheme," she said.

The National Audit Office found that more than 8,000 people had been affected by the pension transfers, but only a quarter had so far come forward to question the advice they had received.

Ms Hann said: "Of that 8,000 only about 1,800 have so far progressed any sort of complaint, which is around 25%. So there are literally thousands of steelworkers who have yet to make their complaints."

While the six-year time limit for compensation claims may be reviewed as part of the FCA's consultation, Ms Hann urged steelworkers to pursue claims immediately.

"We have to remember that we are still in the consultation stage around this redress scheme and part of the consultation is whether or not that six year time limit should apply.

"But to be on the safe side, the prudent thing to do is not to wait for this compensation scheme to be put in place but to take action straight away."