Pontypridd-based Hyde Financial Management, which advised British Steel Pension Scheme members, has failed - with claims at the Financial Service Compensation Scheme.
The firm, which was formerly known as Imperial Wealth Management, was placed in default yesterday (March 15), paving the way for the FSCS to pay out on any eligible claims against it.
It is now yet known how much the FSCS is expecting to pay out on these claims although FTAdviser understands the claims it has received thus far all relate to pension transfers.
A declaration of default happens when the FSCS is satisfied the firm cannot meet any eligible claims made against it.
Mamunul Wahid, solicitor at Clarke Willmott, who handles legal cases for steelworkers, said it was acting for a number of former members of the British Steel Pension Scheme who were advised by the firm to transfer into what he claims were “opaque investment with high charges”.
Wahid alleged the clients received exactly the same advice as each other regardless of their specific circumstances and were rushed into making a decision as they were told that the product was being taken off the market in July 2017.
He said: “We would strongly encourage the FCA to look very carefully at the original advice and the circumstances leading up to this liquidation and no doubt the FSCS will share any intelligence it gathers as a result of considering the many claims it will receive.”
Wahid added it was "unfortunate" the FSCS would now pick up the bill for what he claimed was "poor advice".
According to Companies House, Hyde Financial Management went into liquidation in May 2020.
Data released by the FCA in January showed the number of advice firms operating in the pension transfer market has fallen by nearly half since 2015, as insurance costs and regulatory changes took their toll.
Out of the 1,310 firms still active in the market, 254 firms (19 per cent) had provided 3,427 clients with a personal recommendation to transfer from the BSPS in 2017-18.
The FCA said it would follow up with every firm involved with BSPS advice.
The BSPS saga
BSPS members were asked to decide by December 2017 whether to move their defined benefit pension to a new plan, BSPS2, or stay in the existing fund, which was then moved to the PPF as part of a restructuring of pension liabilities.
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 that resulted in 10 companies – key players in the debacle – stopping their transfer advice service.
amy.austin@ft.com
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