The Financial Conduct Authority (FCA) has written to the nearly 8,000 British Steel Pension Scheme (BSPS) members that carried out a defined benefit (DB) pension transfer.
In a letter sent to 7,700 steelworkers, the FCA encouraged the members to review the advice they had received to transfer out of the pension scheme, and make a claim against their adviser if needed.
Megan Butler, executive director of supervision for investment, wholesale and specialists division at the FCA: “You should check the advice you were given and, where appropriate, complain in order to seek any compensation you are potentially due.
“You should consider whether your advice was suitable or not based on your needs.
“If you received unsuitable advice and do nothing, you may end up with less, or no, money during retirement.”
Investigation
In December 2017, BSPS members were given three options about the future of their DB pensions:
- shift to another plan;
- stay in the fund, which was moved to the Pension Protection Fund as British Steel was closing its existing scheme; or,
- transfer out.
Some of those opting to transfer out became entangled in a scandal which saw financial advisers encourage steelworkers to transfer their retirement pots to other investments; including esoteric, high-risk overseas funds.
The FCA found that in only 21% of cases it reviewed, the advice given appeared to be suitable.
The remaining 79% was either unsuitable, or unclear.
Crackdown
This comes several weeks after the FCA set out a range of measures designed to address weaknesses across the DB pension transfer market.
It included steps to reduce conflicts of interest by banning contingent charging, as well as help for advisers “who want to do the right thing and provide good quality advice to their customers”.
