BSPS advice firm under investigation by FSCS

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BSPS advice firm under investigation by FSCS
Emissions from a chimney at the British Steel Ltd. plant in Scunthorpe, UK (Dominic Lipsinski/Bloomberg)

An independent financial adviser associated with the British Steel Pension Scheme scandal is under investigation by the Financial Services Compensation Scheme.

Newport-based Prism Independent Financial Advisers Ltd was placed into solvent liquidation at the end of 2020, however this year it has converted to a creditors voluntary liquidation.

This satisfies the first condition for the FSCS declaring a default, and so the lifeboat scheme is now investigating the individual claims against the firm.

If a claim is validated, a default can be declared.

The FSCS did not confirm the number of claims currently lodged against Prism Independent Financial Advisers.

The company is associated with BSPS claims.

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.

The FCA announced last year that it plans to deliver £71.2mn in compensation to former members of the scheme who received unsuitable advice. 

The scheme covers those who transferred out between May 26, 2016 and March 29, 2018. 

However, in February this year a number of steelworkers wrote to the FCA expressing concerns about the regulator’s calculations for the scheme.