Double jeopardy

Quilter raises compensation set aside for missold pensions from £12m to £29m

WEALTH management group Quilter today more than doubled to £29 million the amount of money it has set aside to cover compensation for British Steel workers badly advised to switch out of their company pension schemes.

In one of the biggest pension scandals of recent years, scores of British Steel workers say they were left heavily out of pocket after being told by fee-hungry advisers to transfer from British Steel’s generous defined benefit scheme into costlier and less tax-efficient products.

The Evening Standard has reported on how employees were now facing many years’ delay to their retirement plans having been left hundreds of thousands of pounds poorer.

One of the main advisory companies to offer such advice was called Lighthouse, which was subsequently bought by Quilter last June for £46.2million.

Quilter set aside £12 million for potential claims from about 30 British Steel workers in March but, following publicity about the scandal and a Financial Conduct Authority investigation, 30 more complaints have come in, leading the group to today set aside £29 million for compensation and legal costs amid “a prudent assumption regarding recoverability under Lighthouse’s professional indemnity insurance”.

Quilter has said Lighthouse advised about 300 British Steel workers to transfer. “This covers our current estimated liability for redress in respect of the BSPS [British Steel Pension Scheme] pension transfers undertaken by Lighthouse. We continue to work proactively with the FCA to ensure good customer outcomes for the clients involved.”

The FCA recently published results of a review into the controversial practice of defined benefit pension transfers and found the percentage of unsuitable switches for British Steel workers was even higher than in the rest of the market.