Factory gate 'vultures' feast on British Steel pensions

Frank Field

British Steel pensioners were targeted in a scandal "more serious" than PPI mis-selling, the chair of an influential group of MPs has said.

A United Kingdom parliamentary committee on Thursday called on British regulators to help members of the troubled British Steel Pension Scheme and ban transfer fees, warning that a misselling scandal is erupting on transfers out of the plan.

Yet today's report, which focuses on the closure of the British Steel Pension Scheme (BSPS) reveals the British authorities and Tata both failed to protect some 124,000 members from a "major mis-selling scandal".

Since March 2017, the scheme has processed 2,600 pension transfers equating to a total value of £1.1bn, according to the trustees. The average amount transferred out was £400,000 and in around 20 cases the transfer value exceeded £1 million. Adviser fees charged were as high as 10 per cent, the committee heard.

The report continued: "The FCA online register is a potentially valuable resource but is now very confusing".

-Is your final salary pension at risk?

Field says: "I struggle to fathom how things like contingent fees are, or have ever been, considered an acceptable basis for providing "impartial" advice on a decision like this".

"Once again we find TPR fiddling while Rome burns, when it should have seen this rip-off coming", he said.

It said "faced with making a life-changing choice in a hurry", many were attracted to the third option which meant giving up generous and stable benefits in favour of a riskier investment.

"This is the first deal like this, but there will be more".

He added: "All the responsible authorities must act, now, to stop more people being cheated".

The UK government has yet to issue its response to the "neglect" claim. We have been carrying out considerable work within our remit on DB pension transfer advice.

The committee recommended the Pensions Regulator conduct a review to learn lessons, and the FCA create an online register of advisers and their current status. We are now looking at the Register to see how we can make it easier to use.

The report also urged the FCA to reform its register, which lists the details of all regulated financial advisers and their firm.

"We believe this was the best possible outcome for everyone involved in what was a very challenging situation".

'We also helped tackle unscrupulous financial advisers who were exploiting the situation and the current high transfer values available by working closely with the scheme trustees, the FCA and The Pensions Advisory Service (TPAS).

The report relates to a major restructuring of the scheme to prevent its sponsor, Tata Steel UK, from being driven to insolvency. We reviewed communications sent to members and were satisfied they adequately warned of the dangers of transferring out of a DB Scheme. "Vital consumer protection information, such as the suspensions of permissions, must be given far greater prominence".

Hargreaves Lansdown head of policy Tom McPhail said the scheme trustees and administrators should have borne more responsibility for members, arguing "it shouldn't have come as a surprise that many members were interested in transferring out".

The committee warned that this practice could be being carried out across the country as the pension freedoms introduced by George Osborne in...

He adds: "To propose, as the FCA did in July previous year, abandoning the adviser presumption against transferring out of a gold-plated, stable, indexed pension scheme: it really makes you wonder whose side they're on".

Responding to the report, Royal London director of policy and former pensions minister Sir Steve Webb said members were not given enough time or information to make the choice, but said the response should not be to cut off the pension freedoms.

The trustees of the UK's British Steel Pension Scheme (BSPS) have hit back at accusations that the communication of their ambitious restructuring project to members was "woefully inadequate".

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