Steelworkers pension scheme

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Article by Adele

The Financial Conduct Authority (FCA) recently ran a seminar in South Wales to try to help steelworkers to understand whether the advice to transfer they received was provided properly.

However, the seminar doesn’t seem to have helped according to some steelworkers who attended and described it as “a bit confusing” and “not clear cut”. It seems that many steelworkers are comfortable with the advice because in many cases their pensions are now in defined contribution schemes which are performing well and increasing in value. It seems that the FCA might be blowing the transfer of pensions out of proportion. 8,000 members transferred out of the scheme, with transfers worth £2.8 billion. However, only 30 scheme members attended the seminar despite it being widely publicised and attended by The Financial Ombudsman, The Financial Services Compensation Scheme, The FCA and the Money Advice Service. More bureaucrats than clients then!

Meanwhile the second advice firm, S&M Hughes, involved in advising members to transfer out of the scheme has gone into liquidation.

A number of claims have already been brought against advice firms in the South Wales area who advised on transfers and it seems that over £2million in compensation has been paid out.

The FCA seems convinced that most of the advice to transfer was “bad advice”. It has long maintained that over 50% of the advice given has been incorrect, but recently Online platform Nucleus started to challenge that assumption by pointing out that it was based on the FCA’s targeted reviews. In other words, on firms that they had concerns about in the first place, so perhaps a 50% reject rate on the advice isn’t surprising in firms already flagged for concern. What we don’t know yet is the overall figure when you take into account all the “good/normal” advice firms who provide the majority of the advice. This will probably not come out for many years and I suspect that the percentage of “incorrect” advice to transfer will turn out to be very low.

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