Field writes to FSCS over ‘mis-advised’ BSPS members

Work and Pensions Committee chair Frank Field has written to the Financial Services Compensation Scheme (FSCS) over concerns about the compensation offered to “mis-advised” British Steel pensioners.

The concerns, related to over £40m transferred out of the British Steel Pension Scheme (BSPS) to advice firm Active Wealth, were first expressed by the Financial Conduct Authority (FCA) after it queried how the way FSCS calculated the compensation.

Members who were misadvised are entitled to up to £50,000 in compensation, a figure the FCA has suggested is inadequate.

Previously, Field said that BSPS members were “shamefully bamboozled” into signing up unsuitable funds with high investment risk and high management charges. Consequently, Active Wealth was barred from giving transfer advice and later declared bankruptcy.

Field wrote: “British steelworkers were roundly failed by the official regulators meant to protect their life savings. They were given precious little to guide them through murky waters filled with scammers looking to snatch their pensions – scammers who had little to fear from the FCA’s grossly inadequate action at the time.

“Now it seems they are being sold short again on what even the FCA calls “rightly” deserved compensation. The FCA has ridden to their defence and urged the FSCS to be more generous, but the FSCS is clinging to rules the FCA says needn’t apply.”

According to Active Wealth, of the 300 BSPS clients it advised, “around a third” acted on the advice. The average transfer value it advised was £398,347, with the highest totalling £790,404.

In response, the FSCS said that it will revisit the 15 compensation claims it has received over the BSPS case, but refuted that this case should be regarded as “unique”.

“British Steel pensioners deserve more than tinkering around the edges — at the very least, they should be given the maximum possible compensation for the grievous losses they have suffered. The FSCS must think again.”

Field added that The Pensions Regulator’s response to the situation has been “typically underwhelming”.

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