STEELWORKERS in South Wales will be compensated for unsuitable advice they received to transfer out of the British Steel Pension Scheme.

The Financial Conduct Authority (FCA) has today launched a redress scheme, ordering firms to review the advice they gave to pension holders and make matters right if they were found to have given poor advice.

The FCA found nearly half the advice given to pension scheme members was unsuitable and said the new scheme would give steelworkers affected "the retirement they worked for".

Steelworkers who fell victim to poor advice could receive an average redress of £46,000, the FCA has calculated. Financial firms are obliged to contact every steelworker they advised by the end of February 2023.

Therese Chambers, the FCA's director of consumer investments, said former members of the British Steel Pension Scheme were faced with "tough and complex choices" when many took the advice of finance firms to opt out.

"Never was clear and objective advice more needed," she told the Argus. "Far too many steelworkers were let down by their advisers."

What happens next?

The redress scheme is now live but the FCA will give advisory firms "a few months to prepare".

They will need to start reviewing the files of every steelworker they previously advised by the end of February, and then ask each client whether they want to be part of the redress scheme.

"They should say yes," Ms Chambers advised steelworkers.

The FCA is providing a tool that firms will have to use to calculate redress payments. Firms will have to provide details of all cases rated as 'suitable' to the FCA so it can check if consumers would like the Financial Ombudsman Service to independently review their advice. 

Consumers should be contacted by their adviser between 28 February 2023 and 28 March, with advice being reviewed by the end of September 2023.

More information is available on the Financial Conduct Authority's website.

Customers of firms that are no longer trading should make a claim with the Financial Services Compensation Scheme.

"We have consulted widely on a redress scheme for British Steel Pension Scheme members," said Sheldon Mills, executive director for consumers and competition at the FCA. "We found that almost half the advice given to members was unsuitable – an exceptionally high level compared with other cases.

"Today we’re confirming the rules for the redress scheme, so that BSPS members can get the retirement they worked for. 

"We’re working to get the scheme in place quickly to end uncertainty for members. We will be watching advisers closely and have put in place checks so that consumers can have confidence that they’re being treated fairly under the scheme."