Following the British Steel pension scandal, financial advisers involved with steelworkers will be audited. This could have an impact on pension transfers in the scheme. Read on if you think you might be affected.
What is the current situation with British Steel Pensions?
Changes to the British Steel Pension scheme were announced in March 2017. Since then, trustees processed 2,600 pension transfers worth over £1.1bn.
Many steelworkers did not have the knowhow to choose a self-invested personal pension (SIPP) scheme. Unscrupulous financial advisers took advantage of this. They recommended schemes unsuitable for investors. This has left many out of pocket.
The Financial Conduct Authority (FCA) is currently investigating 17 companies that took advantage of steelworkers. Some investors have already made claims of financial mis-selling and the FCA anticipates further claims.
Scheme members claim that the advice they received on their pension transfer was inadequate. Some have lost up to £200,000.
Now the advisers will have to prove that they are acting in the best interest of their client when handling British Steel scheme pension transfers.
Are investors protected?
Usually professional indemnity insurance is used by advisers who receive complaints from investors to cover any losses. However in the case of British Steel, professional indemnity insurers will audit the processes of financial advisers. As a result, there is no guarantee that their cover will be renewed.
Many professional indemnity insurers have introduced a blanket exclusion in new policies involving steelworkers’ defined benefit transfers. The firms that have advised steelworkers may not have their policies renewed.
If advisers do not pass the audit and have their professional indemnity insurance renewed, they will be forced to cease trading and will not be protected in the event of a complaint being made against them. This also means that investors will not be able to recoup their losses directly from the adviser.
What can I do if my adviser has gone bust?
If you’re a British Steel worker who has invested in a SIPP scheme, you may have been mis-sold an investment. As a result, you could be owed compensation if an adviser has not provided suitable investment options.
Even if your adviser goes into administration, you will still be able to seek compensation. The Financial Services Compensation Scheme (FSCS) provides compensation up to the value of £50,000 where the company responsible has ceased trading.
If you have lost much more than £50,000, you could also seek compensation through the courts with the help of an experienced financial mis-selling solicitor.
If you transferred out of your British Steel pension scheme into a SIPP unsuitable for you, get in touch today. Our team of experts can offer advice and resources on a no win, no fee basis.