Fraction of Active Wealth payouts relate to steelworkers

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Fraction of Active Wealth payouts relate to steelworkers

Only a fifth of payouts from the Financial Services Compensation Scheme (FSCS) relating to Active Wealth were paid to steelworkers.

Last month it emerged the FSCS was in the process of paying out £531,000 relating to claims it had received against Active Wealth, which is now in liquidation.

Data released from the FSCS showed from a total of 43 claims closed, payment of £442,000 was issued to 14 claimants, and a further £89,000 was to be paid to another three cases.

But from these, only £138,000 had been paid to date to members of the British Steel Pension Scheme (BSPS).

The FSCS has added these numbers might have to be corrected because it is still reviewing exit fees.

Several MPs have been asked to intervene in the way steelworkers' pension compensation was being calculated by the FSCS.

Alistair Rush, principal at Rutland-based Echelon Wealthcare, who organised free counselling sessions for members of the 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, who represent constituencies in South Wales.

In response, the FSCS said that it was calculating compensation using the Financial Conduct Authority’s (FCA) detailed methodology for pension redress, which was published in October 2017 after industry consultation.

"This methodology is complex, and uses a number of actuarial assumptions," it said.

The FSCS said it was willing to engage with individual customers, or their representatives, to discuss its compensation calculation.

The scheme said these customers had been "treated badly by Active Wealth", and the FSCS said it wanted to ensure they were compensated for the "negligent" advice they received.

"In FSCS's discussions with customer representatives to date, it has been acknowledged that FSCS is correctly following the FCA's methodology – but that the methodology results in some customers receiving less compensation than they were hoping for," it said.

"FSCS will continue to engage with customers to ensure that it provides as much help as it can," it concluded.

Some of the self-invested personal pension (Sipp) providers used by Active Wealth charged a 5 per cent exit fee if they withdrew their funds before a five-year period.

This may mean steelworkers could be entitled to additional compensation because the FSCS is still deciding how to address the issue of exit fees in its calculation.

It said: "FSCS is not refusing pay compensation for these charges. FSCS simply wants to obtain more information about this, and any other fees, imposed by the customers' current pension scheme before it decides how to reflect this in its compensation calculation."

In response to the FSCS statement, Mr Rush said: "I hope FSCS looks favourably to the plight these people are in."

He also revealed he would be meeting with two of the MPs he wrote to – Mr Smith and Mr Kinnock - with a group of steelworkers by the end of November.

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