‘Urgent action needed over steel pension scandal’ – MPs
ASTEEL pensions mis-selling scandal is erupting, according to MPs, who said British Steel Pension Scheme (BSPS) members had been “shamelessly bamboozled”.
The Work and Pensions Committee said it had received worrying evidence about financial advice provided to members of the BSPS.
BSPS members had, over the past year, “been exploited for cynical personal gain by dubious financial advisers in tandem with parasitical so-called ‘introducers’,” a report has said.
It added: “The circumstances surrounding the BSPS created perfect conditions for vultures to take advantage.”
Unsuitable advice on defined benefit (DB) transfers is not only confined to BSPS members, the report warned.
It continued: “Research by the Financial Conduct Authority (FCA), which regulates advisers, shows that only half of such advice nationwide meets its standards. Yet more than 100,000 people a year are taking DB transfers on the back of this advice.
“Another major mis-selling scandal is already erupting and we therefore call on the relevant bodies to treat this as such and take urgent action.”
Members were asked to choose between two pension schemes which offered inferior benefits to the BSPS – the Pension Protection Fund (PPF) or a new scheme, BSPS2. But many scheme members had lost trust and a member communication plan proved “woefully inadequate”.
The Pensions Regulator was responsible for ensuring members were not left in the dark.
But the report continued: “All this failed. Instead, faced with making a life-changing choice in a hurry, many members were attracted to a third option of a DB transfer. This was seemingly unforeseen by all those bodies with a duty to watch and act.”
One steelworker at Port Talbot, who asked to remain anonymous, said: “The consensus is the BSPS failed to realise how many people would transfer their pension into a private one and failed to provide enough information initially, and when they did become aware, the information they did provide was too little and too late for the majority.
“Many members also feel the unions did not do nearly enough to help them. Members just wanted the facts and options explained clearly.
“Unfortunately the outcome left many in no man’s land – they had very little financial knowledge or experience. Some would base their decision to transfer out on the fact they thought the BSPS had been badly run by the trustees, which is why the scheme had shut. In reality, the facts were the scheme had been run very well.
“Those who did transfer out were then left the daunting task of finding a suitable financial adviser. There are good and bad financial advisers.
“As members only had a small timeframe to transfer out, this left many unable to.
“Those who did find a financial adviser and transferred out may have not fully understood the consequences, which is where the misselling issue arises.”
Frank Field, chairman of the committee which authorised the report, said: “All the responsible authorities must act, now, to stop more people being cheated.”
A spokesman for the Pensions Regulator said it had reviewed communications sent to members and was satisfied they were properly warned of the dangers of poor financial advice.
A Tata Steel spokesman added: “The trust supported members through the consultation process with personal information packs, roadshows and a free helpline service.”