MPs told to intervene in steelworkers' pension compensation

Mr Rush, who organised free counselling sessions for members of the British Steel Pension Scheme (BSPS), has written to independent Labour MP Frank Field, chairman of the Work & Pensions select committee, and to Labour MPs Nick Smith and Stephen Kinnock.

Mr Rush has asked the MPs to receive a group of steelworkers to discuss the "latest twist" in their pension transfer saga.

The FSCS is in the process of paying out £531,000 relating to claims it has received against Active Wealth, the first firm to be stripped of its pension transfer permissions by the Financial Conduct Authority (FCA), entering into liquidation in February.

In May, the FSCS explained how it would calculate the compensation for these claims.

The scheme said it would compare the benefits that would have been available to the claimant had they transferred to the new BSPS with the current value of their pension.

In his letter to the MPs, Mr Rush said the methodology the FSCS is using disadvantages the steelworkers in a number of ways.

He said that the way in which the FSCS has used benchmarks to establish loss is "perverse".

Mr Rush said: "In effect, they have looked at the single day that these men transferred out of their tip off schemes, and they used that day as the reference point for compensation."

According to Mr Rush, by using this approach, the FSCS is disregarding the fact that the steelworkers "are all on a long journey, not a single day event".

The perversity of it beggars belief. They were nobbled by the system when they took advice, and now the system is nobbling them, and suggesting some need not to be compensated at all, after it accepted they were ripped off.Al Rush

He also noted that the scheme is using "an unrealistically low assumption of the costs and charges that the men will pay".

He said: "In working in this manner, they have placed all the risk of the shoulders of the men who were scammed – not only before they transferred out of their scheme, but also afterwards.

"The perversity of it beggars belief. They were nobbled by the system when they took advice, and now the system is nobbling them, and suggesting some need not to be compensated at all, after it accepted they were ripped off.

"If you would be prepared to receive them and discuss a way forward, I would be very grateful."

Active Wealth was one of 10 firms which stopped giving transfer advice after they were identified as key players advising members of the BSPS to transfer out of their defined benefit (DB) pensions.

The firm had advised as many as 300 British Steel pension clients, of which 64 proceeded to transfer out of the British Steel pension scheme into alternative pension arrangements, without taking further advice.

FTAdviser reported in November that Active Wealth was working alongside unregulated introducer firm Celtic Wealth Management & Financial Planning, which had referred the clients to the adviser.

maria.espadinha@ft.com