British Steel pension: Firm fined £2.4m for unsuitable advice

Many steelworkers lost out when they switched their pensions

A financial company has been fined nearly £2.4m for advising people to give up valuable pensions.

Pembrokeshire Mortgage Centre (PMC) gave unsuitable advice to 420 consumers to opt out of the British Steel Pension Scheme and other plans.

The firm earned more than £2m in transfer and ongoing advice fees.

The Financial Conduct Authority (FCA) said most people should keep the guaranteed income provided by the defined benefit (DB) plan.

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DB schemes guarantee people a certain level of income in retirement, based on their salary. It is a valuable investment with advantages that cannot be replicated by other investments.

The average transfer value per customer was about £293,000, or £314,000 for BSPS members, the FCA said.

As of 30 November 2022, the Financial Services Compensation Scheme (FSCS) has upheld 213 pension transfer claims against PMC and paid out more than £13.3m in compensation.

Many of the people advised were in a vulnerable position due to the uncertainty surrounding the future of the British Steel Pension Scheme and the short timescale they had to make a decision.

But the regulator found that 60% of people did not receive the quality of advice they needed to make an informed decision.

'Woeful advice'

PMC is currently in liquidation. The FCA said it would give preference to creditors, some of whom may be consumers, ahead of its financial penalty, to maximise funds available for redress.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "The quality of advice seen here was woeful.

"The failings were particularly egregious in the context of the British Steel Pension Scheme, where customers were in an unusually vulnerable position."

Failings included reports containing contradictory, misleading and confusing statements and having adequate resources to deal with the increase in cases, the FCA said.

Mr Steward said anyone affected should contact FSCS to see if they are owed redress.

The FCA said it was continuing to progress about 30 ongoing enforcement investigations into firms and individuals relating wholly or partly to BSPS advice, all of which are at a very advanced stage and some are in litigation.