"The regulatory system left British Steel Pension Scheme members open to being manipulated and taken advantage of by unscrupulous financial advisers."
- Public Accounts Committee, Investigation into the British Steel Pension Scheme
Published last Monday (18/07/22) the report states that advisers were “financially incentivised” to provide “unsuitable advice” which led to approximately 7,800 steelworkers exiting the British Steel Pension Scheme and £82,000 lost in life savings. Current Bank of England Governor Andrew Bailey oversaw the FCA at the time of the scandal.
The report claims that the FCA was “aware” of the potential risks to consumers caused by new legislation in 2015 but failed to take preventative action to protect consumers. In 2017, the FCA allegedly “failed to identify the scale of the issue” and didn’t know what was happening in the DB pension transfer market or the risks of members transferring out of these schemes.
Furthermore, the Public Accounts Committee claims that “many have not been compensated fully” and for those whose advice firms have entered insolvency, £21 million in compensation has been lost due to financial limits.
In March 2022, the FCA proposed a redress scheme with an estimated cost of approximately £71.2m in compensation after disclosing that 47% of the advice given to steelworkers by financial advisers was “unsuitable.” However, the Public Accounts Committee claims there are “concerns this figure may end up being significantly higher.”
Meg Hillier, Public Accounts Committee chair has said:
“Even with 2 years lead time the organization was unprepared. First for the systematic mis-selling that robbed thousands of their life savings and retirement plans, then in coming up with a redress process which is hard for those affected to navigate.”