The compensation body is now accepting claims in relation to advice firm S&M Hughes Ltd (trading as Crescent Financial) which was placed into liquidation some time ago and has now failed.
The FSCS said that as part of its monitoring of failed financial firms, it identified that the firm may have provided advice that left people “worse off.”
In 2017, many British Steel workers were advised to transfer out of their defined benefit pension into a defined contribution pension, typically a Personal Pension Plan or a Self-Invested Personal Pension (SIPP).
It was one of three choices available to British Steel Pensions Scheme (BSPS) members. The others were the new scheme (BSPS2) and Pension Protection Fund (PPF).
When British Steel decided to encourage workers to consider moving their pension a number of advice firms moved in but poor advice was widespread and the scandal attracted national media attention with a number of Financial Planners helping victims on a pro bono basis and leading MPs getting involved.
The FSCS said it has already paid £2.4 million to customers who had been advised to transfer out of the British Steel Pension Scheme by Active Wealth (UK) Ltd. The FSCS found that the returns needed by the former BSPS members’ new pensions were “unrealistic” to match the benefits offered by the BSPS2 or the PPF and the customers would have been better off if they had not transferred to a private plan.
The FSCS added that even if those that transferred have not lost money - the terms, exclusions and complexities involved in a DB transfer may not have been adequately explained.
By transferring to a private pension arrangement, they would also have lost the benefits already built up in the BSPS. The advice they received may not have been the best advice for them, said the FSCS.
Claims can be made via the FSCS website.