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FSCS declares two firms facing BSPS claims in default

FSCS declares two firms facing BSPS claims in default

Two pension advice firms facing 88 claims between them have been declared in default by the Financial Services Compensation Scheme.

The FSCS said all the claims were currently in progress and were all for pension transfer advice. They also included a number of British Steel Pension Scheme claims.

The firms are Liverpool-based Smith, Law & Shepherds, facing 20 claims, and Birmingham-based County Capital, facing 68 claims.

These are the latest firms to be declared in default following the BSPS transfer scandal, which saw hundreds of British Steel workers fall victim to unscrupulous financial advisers and lose thousands from misadvised pension transfers.

Other BSPS advisers declared in default in recent months include West-Yorkshire based firm Keywood Olley & Associates Ltd, Leeds-based Channel One Financial Planning, and Newcastle-based Whitebridge Financial Planning.

Earlier this year, the Financial Conduct Authority also stopped Welsh IFAs AJH Financial Services and David Stock & Co Limited from disposing of assets - both of which had advised on transfers from the BSPS.

Earlier this week, MPs said the FCA had “inadequate oversight" of firms involved in the BSPS transfer scandal and was “consistently behind the curve” when responding to issues.

The group of MPs said that by 2017 when the BSPS was well underway, the FCA still “did not know” what was happening in the defined benefit pension market and it had “inadequate oversight of the firms involved”, only later finding out that “47 per cent of cases the advice provided was unsuitable”. 

Smith, Law & Shepherds, one of the latest BSPS advisers to default, was also issued with an enforcement action notice in March by the Information Commissioner’s Office after it “failed” to provide data to two clients concerning their personal pensions.

The advice firm, whose client book was acquired by Bolton-based Markland Hill Wealth in January, sent the information the same day as the ICO notice.

Both clients had been waiting just shy of two years to receive data relating to their pensions.

The BSPS case

During 2017, BSPS members were asked to make decisions about their pensions as part of a restructure of the scheme.

About 8,000 members transferred out of the 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 Financial Conduct Authority 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 debacle created a mountain of liabilities, which lawyers believe could end up costing the industry up to £300mn.

In September, the FCA and FSCS travelled to Swansea to meet steelworkers who could be due compensation but were met with mixed feelings, with some showing no interest while others claimed they were unable to book a place.

The City watchdog also travelled to Swansea in November to meet steelworkers about bringing possible claims against their adviser.