British Steel will have to pay thousands of workers compensation for incorrectly telling them to abandon their pension plans.
Industry watchdog the Financial Conduct Authority (FCA) yesterday told advisers to ensure that they have the money to pay out claims from those given ‘unsuitable’ advice.
These claims were made by workers who were instructed to move to lower-quality and more risky plans and to leave valuable pensions that they had been receiving.
Compensation: Industry watchdog the Financial Conduct Authority yesterday told advisers to ensure they have the money to pay out claims from those given ‘unsuitable’ advice
This advice would typically have resulted in rewards for the advisers – but left the steel workers facing a poorer retirement.
After Tata Steel’s sale, the British Steel Pension Plan scandal was exposed in 2017.
Around 7,700 personnel were transferred, most of whom had been targets by opportunistic or commission-hungry advisors.
The FCA reviewed the advice given to 192 workers earlier this year and discovered that only a fifth had received appropriate guidance.
The guidance wasn’t appropriate in 47 percent of cases.
And in a further 32 per cent of cases, the advice contained ‘information gaps’, the FCA said.
It added that the level of bad advice that was given to the British Steel workers was ‘highly exceptional’.
Yesterday, it advised advisers to not try to escape their workers’ liabilities by selling assets and said it would take legal action if it did.
Former members of the pension system were also asked to examine whether or not they have received unequal advice.
Members are thought to have lost hundreds of millions of pounds’ worth of retirement income through the scandal.
Workers complained, however that the watchdog was doing too little and too late. This prompted calls to investigate its actions.
Parliament’s spending watchdog, the National Audit Office (NAO), said in October that it would investigate the FCA’s response to the affair.
Members moved around £2.8billion in total out of the British Steel pension scheme.
The NAO will review the FCA’s regulation of British Steel workers and its support plans. It will also examine how compensation is being paid.
They are expected to return in spring.