Financial Services Compensation Scheme  

FSCS declares two advice firms in default

FSCS declares two advice firms in default

The Financial Services Compensation Scheme has declared two financial advice firms in default, one of which had claims in relation to British Steel Pension Scheme advice.

Channel One Financial Planning, trading as Channel One Financial Services, has been in liquidation since January 2021, according to Companies House.

The FSCS listed it in default on January 25, 2022 and told FTAdviser that it has received 17 claims, of which 14 are for pensions transfer advice. 

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This includes BSPS claims, however it could not say how many of them were BSPS-related at this stage. 

The second firm, Midland Independent Financial Services, formerly The Mortgage Shop, has been in liquidation since September 2020 .

The FSCS declared the firm in default on January 25, 2022.

For Midland Independent Financial Services, the FSCS has received five claims, two for pension transfer advice and three for investment advice. None of these are BSPS-related. 

Last week, the FSCS declared another BSPS advice firm, Argent Wealth, in default.

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 £300m.

In September, the FCA travelled to Swansea to meet steelworkers who could be due compensation but was 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 advisers.

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