About half of British Steel Pension Scheme claims are being brought with the help of claims management companies and solicitors, meaning many steelworkers are asked to part with as much as 30 per cent of their award.
According to the Financial Service Compensation Scheme, as of this week (November 29) it has received a total of 1,018 claims from former members of BSPS who were advised to transfer out of their scheme by an advice firm that has since failed.
The total compensation paid out by the FSCS stands at more than £30m.
While around half of these steelworkers have made their claims directly using the lifeboat scheme’s free online claims service, the other half have used a representative - either a claims management company or a solicitor.
The fees charged by such representatives can be significant, often hovering around the 30 per cent mark.
The Financial Conduct Authority has already taken notice of this and earlier this week (November 29) confirmed it will cap CMC charges from March 2022.
The fee cap will start at £420 and go up to a maximum charge of £10,000, depending on the amount of redress a customer is seeking.
The regulator said the only way it could secure "an appropriate degree of protection against excessive charging" was by introducing a cap, dubbing disclosure remedies "insufficient" to fix the problem.
The regulator is also holding more one-to-one sessions with steelworkers to talk about the advice they received and how to make a complaint, which could see more members go to the FSCS directly.
The FCA, FSCS and Financial Ombudsman Service are offering in-person one-to-one appointments in Scunthorpe from next week (Monday 6 to Wednesday 8 December).
The Scunthorpe event follows on from two recent events in Swansea which took place during September and November.
The BSPS case
Three years ago British Steel Pension Scheme members were asked to decide whether to move their DB 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, or to transfer out altogether.
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 a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.
The latest set of BSPS advisers declared in default were: Acklam Financial, A. W. Dallas Financial Services (trading as Portfolio Pension Consultancy), Independent Benefit Consultancy, Tramway Financial Management and West Wales Financial Services (trading as IWA Financial Solutions, and Mike Powell Mortgages).
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