On the go: The Financial Services Compensation Scheme has paid out £21.5m to members of the British Steel Pension Scheme who were wrongly advised to transfer their defined benefit pensions, after payment figures have doubled in the past few months.
The lifeboat scheme told FTAdviser it has so far made 482 decisions, including decisions to reject a claim, with an uphold rate of 88 per cent.
The compensation amount has been £50,000 per claim but the overall payout could grow significantly as the FSCS still has 135 claims in progress.
Lawyers for the steelworkers have previously estimated the industry could face a compensation bill of between a quarter and a third of a billion pounds for BSPS transfers, even with steelworkers not being fully compensated for poor advice.
The Financial Conduct Authority has repeatedly called on steelworkers to bring a claim. In June 2020, it wrote to all members of BSPS asking them to revisit the advice they received and complain if they hade concerns.
In May this year, FCA chief executive Nikhil Rathi said the regulator would be writing to all 7,700 members again.
James Darbyshire, chief counsel at the FSCS, told FTAdviser that since July the compensation amount paid out has doubled and the bill could rise still.
The FSCS, along with the FCA, Financial Ombudsman Service and MoneyHelper, are currently in Swansea holding one to one meetings with steelworkers.
It is expected that more claims could arrive following these meetings after the FSCS explained to steelworkers in what circumstances and exactly how they can put forward a claim.
Darbyshire said: “[The meetings] have been very well received by the people who've come, with people leaving saying that they are going to make a claim.
“We will obviously have to see whether that tracks through in the weeks ahead and this will be part of the thinking behind what the next sort of event might be.”
Three years ago BSPS members were asked to decide whether to move their DB pension to a new plan, BSPS2, or stay in the existing fund — which was then moved to the PPF as part of a restructuring of pension liabilities — or to transfer out altogether.
As a result about 8,000 members transferred out of the old scheme, with transfers collectively worth about £2.8bn.
But concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA that resulted in a number of advice companies — key players in the debacle — stopping their transfer advice service, while others went out of business.
A subsequent suitability review led to almost two-thirds of DB advisers quitting the market, with the FCA saying there are now about 1,200 advisers holding these permissions compared with 3,000 in 2018.
This article originally appeared on FTAdviser.com
