The UK’s National Audit Office (NAO) has opened an inquiry to examine the steps taken by the Financial Conduct Authority in the aftermath of the British Steel Pension Scheme (BSPS) collapse.
Following a restructure of the scheme in 2017, members were given alternative options for their pension pots, which included transferring their money out of the BSPS altogether.
According to the NAO, around 7,700 members chose this option, and many received independent financial advice to understand the decision they were making.
Roughly £2.8bn ($3.8bn, €3.3bn) was subsequently transferred out of the scheme.
The FCA has since identified that many steelworkers received unsuitable advice and made “poor financial choices and lost significant sums of money as a result”, the NAO said.
It continued: “This investigation will set out the activities the FCA has undertaken to regulate financial advice in the BSPS case, its plans for supporting steelworkers who may be entitled to redress, and the extent to which compensation is being delivered.”
The UK regulator, however, has taken steps to mitigate the ripple effect following the BSPS scandal, including the introduction of additional rules to raise standards within the defined benefit (DB) transfer advice market – such as the ban on contingent charging.
Make a complaint
A spokesperson for the FCA told International Adviser: “We look forward to working with the NAO. We’ve introduced new rules to raise the standard of pension transfer advice and we’re taking action, both with individual firms and across the sector, to ensure that where consumers lost out because of unsuitable advice they receive compensation.
“We are encouraging former members of the British Steel Pension Scheme to consider whether they should make a complaint about the advice they received, as they may be entitled to compensation.”
Some of the work the regulator has been doing includes writing to the 7,700 former members as well as conducting one-on-one meetings with 138 steelworkers in Swansea, in Wales, at the end of September.
These measures are aimed at helping them understand whether they received unsuitable financial advice and, if so, how to make a complaint.
The FCA added that it is also taking action against 45 firms covering 2,441 BSPS cases to make sure that consumers who lost out receive compensation.
