FCA reveals £49m redress scheme for British Steel pensions | British Steel

More than 1,000 former members of the British Steel pension scheme who received unsuitable advice from financial advisers accused of “enriching” themselves will receive an average payout of £45,000 in compensation.

Monday’s City watchdog revealed plans to establish a scheme to compensate people who did not receive redress for poor pension transfer advice that was given when British Steel became financially difficult.

Financial Conduct Authority will also temporarily ban those firms that provided the advice from paying dividends to shareholders or directors bonuses. This is to ensure that they don’t move money out of business before compensation has been paid. They will be forced to make payouts totalling £49m by February 2024.

“Far too many steelworkers were let down by their advisers,” said Therese Chambers, the FCA’s director of consumer investments.

“The scale of unsuitable advice that we have identified was exceptionally high, almost 50%. Some firms took advantage of this situation to enrich themselves. There are some firms that did not do the right thing and have ignored complaints from steelworkers. And there are others who continue to seek to avoid accountability.

“It is against that context that we have decided to proceed with a consumer redress scheme so that steelworkers can get what they worked for.”

The redress scheme relates to a scandal involving members of British Steel’s defined benefit pension scheme, which guaranteed final salary pensions to its roughly 130,000 members and was restructured in 2017 after British Steel’s then owner, Tata Steel, experienced financial difficulties.

The members were required to decide how to manage their pension benefits. Nearly 8,000 members – representing £2.8bn of the fund – chose to move their cash and take their pensions elsewhere. Advisors gave poor advice and took huge fees.

The FCA has reached a settlement with members on a redress program, but it has been criticised for allowing poor financial advice to be dispersed under its supervision. It is supposed to oversee financial advisors. MPs have since accused the regulator of being “asleep at the wheel”.

After launching investigations against 30 companies, the watchdog stated it was considering enforcement. Some of these cases are now being heard by the courts.

FCA directors stressed it would be “watching advisers closely” throughout the redress process, and has put checks in place to ensure British Steel workers are being treated fairly under the scheme.