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British Steel debacle is 'just starting'

 

The number of steelworkers who were mis-advised when they transferred out of the British Steel Pension Scheme is expected to increase, as more and more people are coming forward with claims, Alastair Rush has said.

The principal at Echelon Wealthcare, who has been involved in helping steelworkers with their pension decisions, was appearing on the FTAdviser Podcast to discuss the impact of the case on the advice market.

He said: "We always knew that Active Wealth UK Limited was the tip of the iceberg. In many ways, it was almost impossible to get anybody else who wasn't a client of Active Wealth to come forward.

"There was a thinking within the two communities at Trostre and Port Talbot which was that if you were a client of Active Wealth you were mis-sold; therefore, if you weren't a client of Active Wealth you weren't mis-sold. 

"We knew that wasn't the truth. We had about 130 cases or so from Active Wealth, but we know that there were many hundred times more people who transferred out than that.

"Those are the people who are now slowly starting to come forward, so if the question is 'have we seen the last of BSPS debacle?' No, we haven't. I think it's just starting."

Appearing on the podcast with Mr Rush was Sir Steve Webb, former pensions minister now director of policy at Royal London.

Commenting on The Pensions Regulator's and Financial Conduct Authority's response to the pension transfer debacle, he said "there [is] always a danger of 'regulating on the review mirror'".

He said: "I think there hasn't been a culture either at TPR or FCA of real time regulation, of intelligence, of really knowing what is going on the ground, of acting quickly.

"I was at a conference the other day, the two regulators were there, and they were talking of quarterly meetings... A bit of me just wants to weep, because in 13 weeks in British Steel an awful lot of people could have got an awful lot of bad advice."

Members of the BSPS were asked to decide what to do with their pensions as part of a restructuring process in 2017.

As a result about 8,000 members transferred out of the old scheme by October last year, with transfers collectively worth about £2.8bn.

But concerns about the suitability of the transfers were soon raised leading to an intervention from the FCA, which resulted in 10 firms - the key players in the debacle - stopping their transfer advice service.

Some of these firms regained their permissions some months later, such as Mansion Park and County Capital Wealth Management, also trading as Pension Review Service.

Other such as Active Wealth went into liquidation and claims against it have already arrived at the Financial Services Compensation Scheme.

Sir Steve and Mr Rush also discussed the effect of the case on financial advisers, the trustees’ role in the debacle and the future of DB transfers.