Steelworkers win £49million compensation after being wrongly advised to walk away from gold-plated pension deals
More than 1,000 former members of the British Steel Pension Scheme will receive £49million in payouts after they were wrongly advised to drop gold-plated pension offers.
The Financial Conduct Authority (FCA) has said rogue advisers looking to “get rich” are giving bad advice to metalworkers, who will receive an average of £45,000 each.
Councilors must now pay compensation. If some have gone bankrupt, the Financial Services Compensation Scheme will step in instead.
Payouts: The Financial Conduct Authority says rogue advisers looking to ‘get rich’ were giving bad advice to metalworkers, who will receive an average of £45,000 each
From May 2016 to March 2018, around 8,000 employees transferred £2.8 billion from the steel program when it was restructured.
They’ve moved away from defined-benefit plans, which promise inflation-linked payouts for life.
Many were manipulated by unscrupulous financial advisers into transferring to defined-contribution schemes, which offered less certainty about future payouts.
Most of those who have changed have used counsellors. The FCA said almost half of the advice given was “inappropriate”, a level it described as “exceptionally high”.
FCA’s Director of Consumer Investments, Therese Chambers, said: “There are companies that have taken advantage of the situation and made a fortune.
“There are companies that have not done the right thing by the steelworkers who have complained.
“And there are companies that are always looking to avoid liability. We have decided to put in place a consumer redress system so that steelworkers can benefit from the pension they worked for.
Companies must review the advice they have given and pay those who have lost money because of bad advice.
In April, the FCA banned companies that wrongly advised steelworkers on their pensions from selling assets to avoid paying compensation.
He used emergency powers without consultation for fear companies would dump assets to avoid paying. Former pensions minister Baroness Ros Altmann said it was right that ‘rogue’ advisers were forced to get it wrong.
She said businesses and advisers shouldn’t be able to “get away with it.” The FCA is in a legal battle against two administrators of Estate Matters Financial, which went bankrupt, which it says has led consumers to leave defined benefit schemes against their best interests.
It fined Geoffrey Edward Armin £1.3million for advising 174 people to transfer.
The sole director of retirement and pension planning services has also been banned from “any senior management role” at financial services firms. He is appealing the decision.
The FCA has around 30 other ongoing investigations, all at an “advanced stage”.
The payments are based on the amount needed to top up a pension to bring it into line with the income a worker would have received without change, and are due to start next year.
