The UK financial regulator has been accused of “sleepwalking into another huge mis-selling scandal” by a Labour MP, after an investigation into how thousands of former steelworkers may have lost out following complex pension transfers that earned financial advisers large fees.
Tata was forced to offload the £15bn BSPS to pave the way for a 50-50 merger of its European operations with Germany’s ThyssenKrupp to create the second biggest steel producer in Europe after ArcelorMittal.
But more than 2,000 steelworkers subsequently transferred out of their final-salary schemes after receiving allegedly unsuitable advice.
The FCA is now broadening its probe into the pension’s advice given to people leaving final salary-style pension schemes, demanding information from 45 advisory firms.
Reports across national media have raised concerns about a ‘feeding frenzy’ of advisers targeting steel workers as their pension scheme closes.
One firm – Active Wealth UK – has been responsible for a significant number of pension transfers out of PSPS. Back in November, it voluntarily agreed with the Financial Conduct Authority to cease new pension business. Earlier this week, the FCA said three 0ther firms had agreed to stop carrying out new pension business in relation to BSPS transfers.
Members of the BSPS who were advised by Active Wealth to transfer out of the BSPS are facing more bad news, after it emerged that they will have to pay a 5% charge if they want to leave the fund they are now invested in.
Several BSPS members were advised by Active Wealth to transfer out of their final salary pension and invest in the 5alpha Conservative fund, managed by Newscape Capital Group. It has an exit charge of 5% for the first year of investment, reducing by 1% for every year the client stays invested, according to the fund’s factsheet.
In one case, a client would have to pay £17,000 to withdraw from the fund in the first year!
If you think that you have been affected by poor advice given to steelworkers and are not getting the pension you were expecting or are going to have to pay to leave the scheme, contact us today on 01942 619911 and speak to one of our advisors to see if you may be entitled to compensation for the advice given.