The Financial Conduct Authority (FCA) released details of its redress scheme for victims of the British Steel Pension Scheme transfer misselling today.
A review by the FCA uncovered that 46% of recommended transfer advice provided to members of the British Steel Pension Scheme were unsuitable, with 41% declared suitable and 14% deemed unclear due to a “material information gap.”
The organisation is currently reviewing proposals for the best approach to carry out its redress scheme by next year.
The FCA said an estimated 1,400 pension scheme members will receive £71.2 million in compensation for the botched transfers, with redress scheduled to commence in early 2023 and the first payments distributed in late 2023.
The Work and Pensions select committee detailed the unscrupulous actions committed by the British Steel pension scheme’s financial advisors, and noted that members of the scheme were “exploited for cynical personal gain by dubious financial advisers in tandem with parasitical so-called ‘introducers'”.
The committee accused the FCA of stepping in too late to help members of the pension scheme and said the organisation should have been prepared to intervene when they initially received information about the poorly advised transfers in April 2017 but refused to take action until November 2017.
Analysts highlighted that the poor impact of the scandal will inevitably colour public opinion of the industry as a whole.
“While the vast majority of advisers in the UK provide a hugely valuable service to their clients, the few bad apples involved here have sadly tarnished the reputation of the entire sector,” said AJ Bell head of retirement policy Tom Selby.
“Aside from the direct impact on members who were badly advised, the scandal will also inevitably harm trust in retirement saving more generally.”
“Sadly, scandals such as Robert Maxwell at the Daily Mirror, Equitable Life and now British Steel tend to live long in the memory.”