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British Steel Pension Scheme Compensation Overview:
- Who: British steel workers who transferred out of the British Steel Pension Scheme will receive compensation.
- Why: Thousands of steel workers reportedly received unsuitable advice related to the British Steel Pension Scheme.
- Where: The compensation was announced in the United Kingdom.
The Financial Conduct Authority (FCA) has announced a plan to deliver £71.2 million in compensation to approximately 8,000 steel workers who received unsuitable advice related to the British Steel Pension Scheme.
When British Steel was restructured in 2017, its pension scheme was restructured, and steel workers collectively transferred approximately £2.8 billion from the scheme.
Nearly Half of Financial Advice FCA Reviewed Was Reportedly Unsuitable
The steel workers reportedly took advice from financial advisers that was unsuitable. When the FCA reviewed the advice the steel workers had received, the regulator found that about 46% of the advice was unsuitable.
The FCA says that advisers will be required to compensate steel workers who received unsuitable advice and transferred money from the pension scheme.
For advisers who have gone out of business, the Financial Services Compensation Scheme will cover the payments, which are expected to start being distributed at the end of 2023.
“Under the proposed redress scheme, firms which advised on British Steel Pension Scheme transfers would be required to review their advice,” the FCA wrote in a letter to advisers. “If the advice is unsuitable and resulted in a financial loss for former British Steel Pension Scheme members, the firms would be required to provide compensation.”
The FCA also said that it could take action against advisers who fail to act.
The National Audit Office found that only about 25% of steel workers affected by the pension transfers have questioned the financial advice they received.
Affected Steel Workers Should Pursue Claims Immediately, Solicitor Urges
Philippa Hann, a solicitor representing the steel workers, urges them to pursue their claims immediately because of the possibility of a six-year time limit for compensation claims. It is not yet clear if the six-year time limit will apply.
“But to be on the safe side, the prudent thing to do is not to wait for this compensation scheme to be put in place but to take action straight away,” Hann said.
The proposed compensation scheme will cover steel workers who transferred out of the British Steel Pension Scheme between 26 May 2016 and 29 March 2018. If the proposed scheme is confirmed, it is expected to take effect in 2023.
“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, Executive Director for Consumers and Competition at the FCA, said.
“We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme.”
Steel workers who transferred out of the British Steel Pension Scheme can sign up for updates about the compensation proposals and learn how to file a complaint here.
Are you concerned that you received unsuitable advice about transferring out of the British Steel Pension Scheme? Tell us your thoughts in the comments below.
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