CMCs target British Steel adviser clients

CMCs target British Steel adviser clients

Advisers who helped steelworkers transfer out of the British Steel Pension Scheme are now being targeted by claims management companies.

Damian McPhun, partner at Beale and Company Solicitors, told FTAdviser he has several adviser clients who have had a complaint against them taken to the Financial Ombudsman Service with the help of CMCs.

He explained that during the British Steel debacle the names of some of the IFAs involved became public knowledge, which has drawn the attention of CMCs.

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Mr McPhun said: "The CMC will get hold of a list of clients, they have their ways and means of doing this.

"They will advertise in the local papers, they will get their names out there, they will try to track down everybody that worked at British Steel and say ‘did you transfer your pension and if so come and talk to us free of charge’."

Members of the British Steel Pension Scheme were asked to decide what to do with their pensions as part of a restructuring process in 2017.

As a result about 8,000 members transferred out of the old scheme by October last year, 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, which resulted in 10 firms - the key players in the debacle - stopping their transfer advice service.

Some of these firms regained their permissions some months later, such as Mansion Park and County Capital Wealth Management, also trading as Pension Review Service.

Other such as Active Wealth went into liquidation and claims against it have already arrived at the Financial Services Compensation Scheme.

Despite this clients of the firm have been approached by CMCs interested in submitting a claim on their behalf, but those FTAdviser spoke to all said they declined the request as they have FSCS complaints pending.

Mr McPhun said he is particularly concerned about the origin of the CMSs' client lists.

He said: "There is concern they might contact ex-advisers who might be disgruntled, and get hold of what is confidential information relating to clients, so they will know which client invested in which product."

He is hoping that supervision from the FCA, which recently took over the regulation of CMCs, will help end the practice.

It emerged in April that more than 900 CMCs have registered to continue trading while they go through the FCA’s authorisation process.

Andrew Boyt, pension transfer specialist and freelance consultant, said if advisers are supplying the client lists this poses a data protection and contractual issue.

He said: "GDPR is the law and the penalties are well known, what may be less well known is that most employed adviser contracts and self-employed contracts for service will include specific provisions in relation to client data which the firm could, quite correctly, seek to enforce legally.