Financial Services Compensation Scheme  

FSCS pays £4.4m to Active Wealth clients

FSCS pays £4.4m to Active Wealth clients

The Financial Services Compensation Scheme has paid £4.4m to former clients of Active Wealth, one of the firms involved in the British Steel pension transfer debacle.

As of July 4, the scheme has received 278 claims and paid compensation to 137 claimants who were deemed to have been badly advised by the firm.

Some 45 claims were unsuccessful, and 96 other are still in progress.

Active Wealth was the first firm to be stripped of its pension transfer permissions by the Financial Conduct Authority, before entering into liquidation last year. Many of its clients were members of the British Steel Pension Scheme.

The latest figures revealed by the FSCS showed the claimants received on average £32,000 in compensation, which was in line with what steelworkers have been receiving across the board, said Alastair Rush, principal at Echelon Wealthcare.

Mr Rush, who has been involved in helping former BSPS members with their pension decisions, said some of the claims were considered successful but did not lead to payouts.

This was due to how the FSCS makes it calculations, as it compares the benefits that would have been available to the claimant had they transferred to the new BSPS with the current value of their pension. In some cases the claimant did not lose any money in that scenario.

In an update in June, law firm Clarke Willmott, which is acting for more than 170 steelworkers, stated that it has claimed back more than £2m for these clients who were all badly advised to transfer their pensions.

Mr Rush said: "I think that Philippa Hann [partner at the solicitor firm] and Clarke Willmott have been tenacious in examining the claims put forward by the claimants, and pressing their case with FSCS. I wish things didn’t have to drag on for so long."

He noted, however, that more claims against Active Wealth were still to come, as only about 50 per cent of people who were advised by the firm have so far come forward.

Caroline Rainbird, the FSCS chief executive, confirmed this estimation. Speaking at a Treasury committee evidence session last week (July 3), she said the scheme had paid out on a relatively small number of claims "but we know that there is likely to be more".

Ms Rainbird also revealed that she was going to meet with Nick Smith, MP for Blaenau Gwent in South Wales, to discuss what more the FSCS can do to help steelworkers.

Members of the BSPS 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 FCA, which resulted in 10 firms - the key players in the debacle - stopping their transfer advice service.