Proposals for a £71.2 million compensation scheme for 1,400 British Steel workers have been outlined by the City regulator.
The Financial Conduct Authority has published plans for a compensation scheme for former members of the British Steel Pension Scheme who received unsuitable advice to transfer out of the fund into higher-risk schemes.
Financial advisers received generous fees after wrongly persuading workers, including at the Port Talbot and Scunthorpe steelworks, between May 26, 2016 and March 29, 2018 to transfer out of the workplace scheme.
About 7,700 members chose to leave the defined benefits British Steel pension, which provided a guaranteed income for life. Their money is now in so-called defined contribution schemes, where the income is dependent on stock market performance.
About 46 per cent of the advice relating to the British Steel retirement scheme was unsuitable, according to a regulatory review.
The redress scheme has been launched because not enough eligible people have claimed compensation. It will require firms to contact those who may benefit. If the firm has gone bust, the Financial Services Compensation Scheme, the safety net for savers, will contact those who may be eligible.
The City watchdog estimates that individual firms will pay £31.2 million and the financial services scheme will pay £20.6 million. A further £19.4 million will be paid by professional indemnity insurers.
About 1 in 10 firms that will be required to pay compensation may become insolvent, the regulator said. Those who have already received compensation will not be eligible to make a claim under the redress scheme.
The regulator said it will take strong action against firms that try to avoid paying compensation. It has frozen the assets of one firm and is looking into 30 individuals or firms related to the British Steel Pension Scheme.
Advisers have been able to avoid compensation by shutting down their businesses. Claimants are left to seek redress from the…
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