Lawyers welcome compensation scheme for victims of pension mis-selling scandal, but many steelworkers to be left behind
Lawyers working to help victims of the British Steel Pension Scheme (BSPS) scandal have welcomed news of a £71 million compensation scheme for those affected, but are asking whether the proposals go far enough.
The Financial Conduct Authority (FCA) published plans for a compensation scheme for former members of the BSPS who received bad advice to transfer out of their defined benefit schemes into higher risk schemes, but many of the 7,700 who transferred will be excluded from the scheme.
Our taskforce was set up in 2018 to help victims claim compensation following the bad advice and has so far acted for over 1000 steelworkers and recovered more than £20 million in compensation.
Philippa Hann, partner and specialist in financial services litigation at the firm, said: “It is good news that the FCA are taking this matter seriously and putting plans in place for an official compensation scheme, but taking in the scale and impact of the damage caused, I’m not sure these plans go far enough.
“For example, the redress scheme will only cover people who were advised to transfer out in a window between 26 May 2016 and 29 March 2018, but even many who transferred within that window will be excluded having become time-barred before the redress scheme comes into effect.
“Very broadly speaking, you have six years to make a claim or complaint about the transfer advice received. The FCA has, under current proposals, confirmed that the clock will only stop running for these purposes when the scheme rules are published, which is set to be ‘Autumn/Winter’ 2022. This means that anyone who transferred out before Autumn/Winter 2016 could well be time-barred and not only unable to participate in the redress scheme, but out of time to make a claim or complaint at all. If publication of the scheme rules is delayed, more people could be excluded.
“Ultimately, those people could be left entirely behind and unable to pursue compensation at all. This really isn’t good enough, more so because those who transferred out earlier have the largest losses (around £320,000 on average).
“In our view, anyone who transferred before 2017 should be seriously considering taking steps to make a complaint now to avoid the risk of being time-barred and not being able to pursue any compensation at all.
“Further, anyone treated as an ‘insistent client’ by their adviser will also be excluded from the redress scheme. We have acted for a number of people in this situation and all of our complaints where final decisions have been issued by the Financial Ombudsman Service have been successful. We don’t think those treated as insistent clients should be excluded.
“Whilst former BSPS members may be excluded from the redress scheme, they can still make complaints which can be referred to the Financial Ombudsman Service. We would encourage anyone treated as an insistent client to make a complaint.”
The redress scheme is expected to be in place by early 2023, with compensation starting to be paid late that year by the firms involved in handing out the advice and their professional indemnity insurers.
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