Thousands of steelworkers were let down by their financial advisers and the Financial Conduct Authority, according to a National Audit Office report on the pension transfer scandal of 2017-18.
The watchdog said many had suffered significant losses and missed out on full compensation because the advisers who wrongly recommended that they transfer out of the British Steel Pension Schemehttps://www.thetimes.com/article/financial-conduct-authority-starts-action-on-poor-pension-advice-for-british-steel-worker-2p2q9tzbm had since gone bust.
A deadline requiring workers to make a quick decision on a complex matter, poor communications by the scheme, an ill-prepared financial advice industry and limited insight at the FCA into the scale of the mis-selling all contributed to the issue, the NAO said.
In 2017 a restructuring of the BSPS by Tata Steel gave 44,000 members the choice to transfer out completely. In most cases, transferring out of the BSPS, which offered guaranteed pensions regardless of stock-market performance, was a bad idea, but almost 8,000 members were advised to take that option. Transfer values averaged £365,000 and some were more than £1 million. Advisers were usually only rewarded if the client transferred out.
The FCA was initially blindsided, the report suggested. It “did not have data on the number of transfer requests” or the “state of the adviser market” in the areas in which members lived, such as Port Talbot.
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The data was held by the scheme’s trustees and administrators, who were not FCA-authorised, the report said. Of the 369 advisory firms involved, most were too small to be closely supervised by the FCA. Victims missed out on £18 million worth of compensation.
Meg Hillier, of the Commons’ public accounts committee, said the regulator had “been asleep at the wheel”.
