The furore about the miselling of British Steel Pensions continues to blaze especially in the financial press. The Financial Conduct Authority has taken the matter very seriously and has put ever increasing regulatory burdens on firms like ours who continue to provide final salary pension transfer advice. To the extent that there are now just over 1,00 firms in the UK authorised to look at Final Salary Lump Sum Pension Advice transfers, down from 3,500 just a few years ago.
The FCA is determined to help what it believes to be innocent steel workers who may have been “harmed” financially by advice to transfer their pensions out of the scheme. So much so that they are considering setting up a compensation scheme.
But just how many people are affected?
The British Steel Pension Scheme trustees estimate that just over 8,000 employees transferred their pensions out of the scheme, worth £2.8 billion. Figures from the Financial Ombudsman Service however show that they have resolved 309 complaints at the end of 2020 and are still looking at another 433 complaints, a total of 742 complaints, that’s just under 10% or 1 in 10 of the scheme members. This is despite a sustained campaign by the FCA to promote the value of complaining to the scheme members including setting up roadshows in South Wales and the North.
That means that 92% of those transferred haven’t submitted a complaint (so far of course).
The Financial Ombudsman Service also revealed that its “uphold” rate is 63% in favour of the steelworkers. With 37% in favour of the financial advisers.
These figures could make you wonder what all the fuss is about. It’s clear that a small number of rogue advisers and firms abused the opportunity to charge huge fees and have quickly gone bust, but it does seem that vast majority of steelworkers do seem to be happy with the advice that they received. After all, in the likely event that their funds were transferred into other investments it’s likely that many if not all of them will have seen growth in their funds since transfer. Depending of course on their individual circumstances.
This is set to rumble on for some time to come.