MPs representing constituents in Wales are to put pressure on the Financial Services Compensation Scheme (FSCS) over the way steelworkers' pension compensation has been calculated, with several claiming the workers did not receive enough.
MPs and representatives of steelworkers met in Westminster this afternoon (January 28) to discuss the latest cases of defined benefit transfer mis-selling in the areas of Cardiff, Newport, Scunthorpe and Teesside.
The MPs said they were preparing to write to the FSCS to ask it to justify how it calculated compensation for steelworkers who were misadvised to transfer out of the British Steel Pension Scheme.
Nick Smith, Labour MP for Blaenau Gwent, said: “As well as pushing for clearer penalties for pensions mis-selling as part of the pension schemes bill, we will be asking the FSCS to justify how it calculates compensation.
“We agree that the compensation currently being paid is still too low for the scale of losses.”
MPs and the workers' representatives had already pressed the FSCS to change the way it calculates compensation for those affected in the past, saying the method used was too narrow, focussing on the point when the workers transferred rather than looking at their "pensions journey".
In January 2019, following meetings with steelworkers, advisers and their MPs, the FSCS decided to compensate for the up-front cost of advice on re-investment options for those members who remained in the Sipp recommended by adviser Active Wealth in recognition of the fact members will want to exit the investments the firm recommended.
In addition, where the FSCS had decided on claims based on out-of-date values of the retained investments, it has said it will revisit them to ensure an up-to-date transfer value is used in its calculations.
But the FSCS said it would not change its approach on compensating for ongoing adviser charges, despite steelworker requests for it to do so, because its remit is to put people back in the position they would have been in had they not been mis-advised rather than compensate for the costs of future investments and any advice charges associated with them.
Last month (December 2019), the lifeboat scheme revealed it had paid nearly £32,500 per steelworker over botched pension transfer advice from the now-defunct adviser Active Wealth.
At the time it said it had paid a total of £2.4m to steelworkers and had received 84 claims against the advice firm.
The British Steel pension transfer scandal came about after members of the British Steel Pension Scheme 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, 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.