Pensions  

British Steel adviser has £81k to pay nine claims

British Steel adviser has £81k to pay nine claims

Swansea-based firm S&M Hughes Limited, which trades as Crescent Financial, has less than £81,000 available for nine claims in relation to pension advice, after paying its creditors.

According to the firm’s statement of affairs published by Companies House today (September 18), the potential redress of these claims – coming from steelworkers being represented by Clarke Willmott – hasn’t been included in the total amount owed to creditors, as they have a token value of £1.

According to a letter sent to creditors in August by its liquidator, seen by FTAdviser, the director of S&M Hughes has decided to commence liquidation procedures, so the company can be wound up voluntarily.

S&M Hughes, which was told to cease all regulated activities by the Financial Conduct Authority in May, sold its client book to Portfolio Financial Consultancy in July.

Portfolio told FTAdviser at the time that it would not be taking on Crescent’s liabilities as part of the deal and the money paid would be used to fund any future claims against the advice given to its clients.

Alastair Rush, principal at Echelon Wealthcare, who has been involved in helping steelworkers with their pension decisions, previously revealed that several steelworkers had enlisted the help of the adviser to transfer out of the British Steel Pension Scheme.

The liquidation document showed Crescent has £237,593 in cash at the bank, with liabilities to preferential creditors worth £12,231 and unsecured non-preferential claims in the order of £144,464.

This means the firm will have a surplus of £80,897 after paying these creditors.

The redress given to steelworkers who submitted similar claims against Active Wealth – the first advice firm to go into liquidation in relation to the British Steel debacle - was just over £30,000 on average.

If this was to be reflected with S&M Hughes then its surplus won’t be enough to pay its nine claimants, if they’re successful.

If the firm doesn’t have enough money to pay the claims, and these aren’t covered by professional indemnity insurance, these will fall onto the Financial Service Compensation Scheme.

FTAdviser reported earlier this month that former members of BSPS have lodged claims against almost 30 advice firms, raising concerns that inadequate PI cover will mean the FSCS is forced to make a series of further payouts.

Problems started after 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 Financial Conduct Authority, which resulted in 10 firms 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 the Pension Review Service, while others failed.