The Financial Conduct Authority has unveiled plans for a £ 71mn redress scheme for thousands of steelworkers who were wrongly advised to give up their guaranteed pensions.
Under FCA proposals set out on Thursday, financial advisers will have to review pension transfer advice given to former members of the British Steel Pension Scheme between May 2016 and March 2018.
During this period, about 8,000 members of the BSPS transferred their guaranteed pensions to riskier defined contribution plans after receiving advice from a professional.
A 2018 report by the work and pensions select committee found that many steelworkers were “shamelessly bamboozled”By financial advisers, with their pensions ending up in“ unsuitable funds characterized by high investment risk, high management charges and punitive exit fees ”.
The FCA later found that almost half, or 46 per cent, of the advice it reviewed relating to BSPS was unsuitable, or should not have proceeded.
The FCA is using rarely used powers to launch an industry-wide compensation scheme.
“The circumstances surrounding British Steel Pension Scheme transfers were exceptional, with former members receiving significantly higher levels of unsuitable advice compared to other cases,” said Sheldon Mills, executive director for consumers and competition at the FCA.
“We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme,” he added.