The Financial Conduct Authority is supporting a six-month intervention in Port Talbot which seeks to ensure steelworkers have access to good financial advice.
Organised by Alastair Rush, principal at Echelon Wealthcare, the project will start with a seminar at the end of April with steelworkers who have transferred out of the British Steel Pension Scheme, as questions have emerged about the quality of the advice they have received.
Mr Rush told FTAdviser the FCA has agreed to support this long-term intervention, which will include a group of eight financial advisers offering to provide their services at a standard cost to the steelworkers.
Mr Rush has already helped workers who were advised by Active Wealth, which entered into liquidation in February 2018, to bring their claims to the Financial Services Compensation Scheme.
It 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.
But Mr Rush said there was a concern many more people were given bad advice by other advisers operating at the time.
Mr Rush said: "I have repeatedly crunched the numbers and I almost don’t want to say it because it sounds insane, I think the quantity of mis-sold pension transfers will run at least into the high hundreds.
"Anecdotally, nearly everyone says that between 75 and 80 per cent of those they know ‘pulled their pot’, and Philippa [Hann, partner at law firm Clarke Wilmott] and I have seen collectively, case files in the low hundreds, and I wish I could say I saw one which was acceptable."
Mr Rush noted that most steelworkers said they had a first meeting which lasted 30-45 minutes and that of that, 10 minutes was either "social niceties or attempts to network".
He said: "The actual discussion around transferring out was around 20 minutes. What could the bill be? If we take £30,000 as an average pay-out so far, then it’s not too difficult to do the maths."
Mr Rush, who in 2018 created Operation Chive - Counselling, Help, Information, Volunteer Exchange – to provide free counselling to steelworkers, said the reasons for transferring out were flawed in most cases.
He added: "These men had enough on their plates without being chucked onto a pension transfer production line. We can all make honest, genuine mistakes. But this was, largely, a production line process where the pitch was identical, the recommendation almost preordained."
The FCA plans to work with financial advice firms which conduct defined benefit transfers to stamp out bad practice in the sector after it found a mere 48.1 per cent of advice it had looked at was deemed suitable.
Meanwhile the Financial Services Compensation Scheme has been dealing with scores of steelworkers who claim they were wrongly advised to transfer out of the pension scheme.
The FSCS agreed to pay out on behalf of clients but announced in January that BSPS members won’t receive a reduced discount rate for compensation calculations in claims relating to liquidated advice firm Active Wealth.
FTAdviser reported yesterday (April 9) that the FSCS has awarded additional payments to five steelworkers after revisiting its initial decision.
maria.espadinha@ft.com
