Thousands of people who were advised to transfer out of the British Steel Pension Scheme could be in line for compensation, with the regulator now consulting on a redress scheme.
The Financial Conduct Authority has now written to firms who may be required to pay redress warning them not to try to “avoid their responsibilities”.
Data previously released by the FCA showed that 3,437 British Steel members were advised to transfer out of their DB pension scheme by firms currently active in the market. Almost half (47 per cent)
of those advised to transfer out received advice which “appeared to be unsuitable” according to subsequent FCA investigations.
Between October 2018 and March 2020, the average transfer value across the market for members advised to transfer out of their defined benefit (DB) pension scheme was £405,000.
AJ Bell head of retirement policy Tom Selby says: “Given the apparent industrial scale of pension transfer mis-selling in relation to British Steel pension scheme members, it was always likely a formal redress scheme would be needed to pay compensation.”
“Although transferring out of a DB pension can make sense in certain circumstances, such a decision needs to be taken with great care and with the member’s best interests at heart. Sadly, it is increasingly clear that this was not the case in relation to many British Steel transfers.”
He says the focus should now be on ensuring members entitled to compensation receive it as quickly as possible.
“The regulator has also sent a fairly blunt message to those firms potentially on the hook for DB transfer mis-selling not to attempt to dodge their responsibilities by deliberately depleting their assets.”
