U.K. Plans £71 Million Compensation for British Steel Pensioners
U.K. Plans £71 Million Compensation for British Steel Pensioners
(Bloomberg) --
The Financial Conduct Authority has laid out plans to compensate former members of the British Steel Pension Scheme, after finding almost half of the advice given to steelworkers using the plan by financial advisers was unsuitable.
The regulator expects 71.2 million pounds ($94 million) of compensation to be paid to individuals who lost out after exiting the defined benefit plan, according to a statement Thursday. The FCA will publish rules setting out how advisers must determine whether they gave unsuitable advice and whether they must pay compensation.
Almost 8,000 members chose to transfer out of the scheme around the time of a 2017 restructuring, with the average individual losing 82,600 pounds, according to a March 2022 National Audit Office report. The FCA said in its statement that 46% of “the advice it reviewed relating to BSPS was unsuitable.”
The FCA warned of “strong action” against firms which try to avoid their responsibilities to pay compensation, noting it already has an asset freeze in place at one firm. It also said it is investigating 30 individuals or businesses related to BSPS.
“The circumstances around British Steel Pension Scheme transfers were exceptional, with former members receiving significantly higher levels of unsuitable advice compared with other cases,” Sheldon Mills, the FCA’s executive director for consumers and competition, said. “We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme.”
The Financial Services Compensation Scheme, which covers claims against insolvent businesses or ones that no longer exist, has received around 1,300 claims and paid 37 million pounds in compensation relating to BSPS. In addition to this around 15 million pounds has been paid to former members due to the FCA asking firms to review their previous business.
The latest compensation plan is expected to be in place by early next year, with consumers starting to receive compensation from late 2023. It will cover those who transferred out between May 26, 2016 and March 29, 2018. The FCA has launched a consultation on the plans, which will be open until 30 June 2022.
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