The Financial Services Compensation Scheme has awarded additional payments to five members of the British Steel Pension Scheme after revisiting its initial decision.
The scheme awarded an additional £80,000 to these claimants after recalculating previous payouts and overturning one decision, in which the client had initially been turned away.
In a statement issued today (April 9) the FSCS confirmed it had received 77 claims and paid compensation totalling £1.8m to 61 claimants, who had been badly advised on pension transfers by liquidated advice firm Active Wealth.
The lifeboat fund held 11 of the claimants had suffered no loss, and so were not entitled to any compensation, and five remaining cases were expected to be decided "soon".
The update comes ahead of a parliamentary debate scheduled for tomorrow, led by Nick Smith MP and expected to address the steelworkers' case.
Mark Neale, outgoing chief executive of the FSCS, said: "We know that there are other BSPS members who may be entitled to make a claim but have yet to come forward.
"I urge [them] to make a claim direct with FSCS at no cost, via our website or contacting us for more information."
The FSCS payments worked out an average of just over £30,000 per claimant.
The loss incurred by 16 of the British Steel claimants exceeded the FSCS's then-compensation limit of £50,000 for misleading advice so, whilst these claimants received a combined £800,000, they suffered a net loss of £2.2m.
Had the FSCS's new compensation limit of £85,000, in force from April 1, been in place at the time of the failure the losses incurred by 12 of these claimants would still have exceeded this limit, the scheme stated.
Philippa Hann, partner at law firm Clarke Wilmott and the solicitor representing some of the British Steel workers, said she is delighted with the recoveries made by the steel workers.
She said: "We are particularly grateful to Nick Smith MP, Tonia Antoniazzi MP and Stephen Kinnock MP for their work in raising the profile of the steel workers’ pension transfers and to the FSCS and FCA for attending Westminster last November to listen to our representations about the method of calculating compensation.
"Those discussions led directly to the increased levels of compensation."
Earlier this year the FSCS announced it had agreed to revisit claims based on out-of-date values and would take into account previous annual adviser charges as a result of November's parliamentary meeting.
But Ms Hann said she remains concerned that negligent advice to transfer out of the BSPS extends wider than those who were advised by Active Wealth and urged anyone who is concerned to seek advice.
She added: "We are pleased that Nick Smith MP is keeping the plight of the steel workers in sharp focus at Westminster.
"One of the overriding problems for those seeking compensation for bad advice, is the level of insurance which is available to them.
"More must be done to protect both consumers and the financial advice profession against rogues by increasing the minimum amount of insurance and to introduce mandatory insurance wording.
"This ought to go some way to driving down the amount of claims which fall to the FSCS and to protect the good advisers against the cost of funding it."
rachel.addison@ft.com
