The Financial Services Compensation Scheme (FSCS) has paid out more than £3.5 million in claims against a firm that advised steelworkers to transfer out of the British Steel Pension Scheme (BSPS).
As first revealed by New Model Adviser® in November 2017, Active Wealth (UK) stopped accepting pension business when concerns were raised to the regulator about transfer advice it gave to steelworkers.
In February 2018 Active Wealth (UK) appointed a voluntary liquidator, meaning mis-selling claims could be considered by the FSCS.
At the last count in April, the lifeboat fund had paid out £1.8 million in successful claims against the collapsed business. New Model Adviser® can now reveal that figure has almost doubled to £3.59 million.
Advisers and MPs have campaigned for increased payouts to BSPS members who were advised to transfer out of the scheme, but were pushed back in January. However, in April the FSCS said compensation payouts for five steelworkers would be increased by a combined £80,000.
The FSCS is funded by a levy on financial firms. In April the lifeboat fund said pension and investment advisers will have to contribute £153 million in the 2018/19 financial year.
Departing FSCS chief executive, Mark Neale, said 'the bulk' of claims against advisers came from 'bad advice to transfer retirement savings out of occupational schemes and into Sipps – usually with a view to investment in risky and illiquid assets'.
Al Rush, principal of Echelon Wealthcare and one of the leading British Steel campaigners, told New Model Adviser® earlier this year claims about poor advice to transfer out of the BSPS could hit the high hundreds.