Financial Services Compensation Scheme  

FSCS expects more British Steel claims

FSCS expects more British Steel claims

The Financial Services Compensation Scheme is expecting more claims to come from former members of the British Steel Pension Scheme, its chief executive has said.

Speaking at a Treasury committee evidence session today (July 3), Caroline Rainbird said the scheme has so far paid out on a relatively small number of claims "but we know that there is likely to be more".

In an update issued in April, the FSCS stated 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.

This was the first firm to be stripped of its pension transfer permissions by the Financial Conduct Authority, before entering into liquidation last year. Many of its clients were members of BSPS.

Jimmy Barber, chief operating officer at the FSCS, who was also at the hearing, noted that the British Steel pension case was a case where the scheme had been very proactive in its dealing with the lifeboat fund.

He said: "We’ve been down to South Wales and we’ve collaborated with the MPs." 

Ms Rainbird revealed that she will have a meeting tomorrow with Nick Smith, MP for Blaenau Gwent in South Wales, to discuss what more the FSCS can do to help steelworkers.

FTAdviser reported in March that Mr Smith had called on the government to come up with new criminal charges for rogue advisers.

At the time, he said members of BSPS had received poor advice, faced high adviser charges, and had seen their families’ fortunes put at risk.

Current enforcement measures such as de-authorising rogue advisers and fining them were not enough, he added.

Alastair Rush, principal at Echelon Wealthcare, who has been involved in helping steelworkers with their pension decisions, agrees with Ms Rainbird’s assessment that more claims will come in this case.

He said: "I spoke to some 15 people in the past week which will be putting claims forward, to other firms that are not Active Wealth.

"The complaints will go to the advice firm in the first instance, and after that the solicitor will present it either to the Financial Ombudsman Service or FSCS."

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.

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