Following concerns that thousands of pension mis-selling cases have gone undetected, a House of Commons public accounts committee has called for a review of the UK Financial Conduct Authority’s (FCAs) monitoring of the pension transfer market. A highly critical report by the committee looked into the British Steel Pension Scheme (BSPA). In this case, almost 8,000 workers were advised to swap their secure “final salary” company pensions into less secure investments. In total, around £2.8 billion was transferred from British Steel’s pension scheme.
Such transfers were made possible by new ‘pension freedoms’ introduced in 2015. These freedoms removed tax restrictions and made it easier for people to move their defined benefit pensions into SIPPS, QROPS, and other unsuitable personal pensions. Many steelworkers (as well as people working in other sectors) transferred their pensions after receiving unsuitable or misleading advice. This has left them significantly worse off in retirement.
In most cases, the affected steelworkers suffered losses of around £82,000, but for some workers, this rose to £489,000. The financial advisors involved often received commission or other fees for facilitating a transfer, but around 50% of the advice given to BSPS members was unsuitable.
According to MPs, the FCA “failed” to protect BSPS members from “unscrupulous financial advisers”. The committee said the UK’s regulatory system left these members open to manipulation, and that, despite being aware of the risks, the FCA “failed to take preventive action”.
BSPS mis-selling is something that our Investment Fraud & Mis-Selling experts have been raising awareness of for some time. For example, earlier this year, Technical Director Ben Rees and Associate Alessio Ianiello provided a comprehensive overview of the British Steel pension mis-selling scandal and explored the flaws with the FCA’s proposed redress scheme. Ben and Alessio’s article can be found here.
We commented that the “FCA’s failure to create a comprehensive and just redress scheme to effectively tackle the myriad of issues arising from the scandal simply adds insult to injury for those affected by the mis-selling”. As such, we welcome the findings of the House of Commons’ public accounts committee. Not least because, as well as highlighting failures with British Steel pension mis-selling, the MPs also stressed that this case pointed to more widespread problems within the FCA’s regulation.
As it stands, the FCA is failing to ensure that those affected by BSPS mis-selling, and other mis-selling cases, are compensated in full. We are renewing calls on the regulator to create an effective, comprehensive, and just redress scheme that fully compensates all those impacted.
Following the pension reforms in 2015, hundreds of thousands of people were advised to transfer their defined benefit pensions into risky, unsuitable, and unregulated arrangements. Many of those are likely to have pension mis-selling compensation claims.
If you were advised to transfer your pension into an inappropriate scheme or investment, we can help get your money back. Simply losing money on a pension doesn’t mean it was mis-sold. But if you transferred your pension into another scheme and your advisor did not give you enough information about the product, the new pension was unsuitable for your needs, or the advisor misled you, you may be a victim of mis-selling. Claiming with us is straightforward. It is free to sign up, and we act on a no-win, no-fee basis. If you believe that your pension was mis-sold, contact us to find out how we can help. If you are unsure if you have a claim, we can find this out for you.