Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

UK watchdog sets out pension redress rules for steelworkers

Economy Nov 28, 2022 13:51
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Signage is seen for the FCA (Financial Conduct Authority), the UK's financial regulatory body, at their head offices in London, Britain March 10, 2022. REUTERS/Toby Melville/Files

By Huw Jones

LONDON (Reuters) -Financial advisers will have to compensate many former members of British Steel's pension fund an average of 45,000 pounds ($54,418) each for wrongly advising them to move their retirement savings, Britain's financial watchdog said on Monday.

After the closure of a Tata Steel UK pension scheme, a legacy from previous owner British Steel, steelworkers could choose by December 2017 between moving to a new company scheme or joining a lifeboat known as the Pension Protection Fund (PPF).

But many were advised to take out their money completely and move it into pension schemes which offered no guaranteed income, thus generating bigger fees for advisers.

"We found that almost half the advice given to members was unsuitable – an exceptionally high level compared with other cases," Sheldon Mills, executive director for consumers and competition at the Financial Conduct Authority, said in a statement.

Financial advisers must compensate those affected by February 2024, with more than 1,000 steelworkers expected to receive an average of 45,000 pounds ($54,418), the FCA statement said.

Redress is calculated based on the money needed to top up a personal pension to provide an income similar to what would have been received by staying in the British Steel pension.

PIMFA, which represents financial advisers, said it was regrettable the FCA had not addressed valid concerns already raised by industry.

"We also continue to retain concerns that the total cost of the scheme...will be significantly higher than set out in the FCA’s revised cost benefit analysis," PIMFA said.

Some steelworkers have already received compensation under the separate UK financial services compensation scheme.

A critical report from UK lawmakers in February 2018 said the FCA had been too slow to prevent "vulture" financial advisers from ripping off steelworkers, some of whom have already been compensated, over their 14-billion-pound pension pot.

About 7,800 steelworkers lost an average 82,600 pounds in life savings by transferring out of their defined benefit pension, the report found.

It said steelworkers were shamelessly bamboozled by dubious financial advisers in tandem with unregulated, parasitical introducers who wooed clients with sausage and chips lunches in return for a share in the fee.

The case shone a light on poor practices in pensions more generally, and the FCA said it has opened investigations into 30 firms regarding advice.

($1 = 0.8269 pounds)

UK watchdog sets out pension redress rules for steelworkers
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email