Nick Smith MP Continues To Fight For British Steel Workers Pensions

Nick Smith has vowed to continue his fight for a redress scheme for former members of the British Steel Pension Scheme as he warned time was running out for steelworkers to bring their claims.

British Steel Pension Scheme
British Steel Pension Scheme

Speaking to FTAdviser, the MP for Blaenau Gwent who has been campaigning on the steelworkers' behalf, said he is “not letting go” of the idea of a BSPS redress scheme, adding he understands the City watchdog has “left the door open” to do this.

Smith said: “[The Financial Conduct Authority] have talked about it being considered and it may take three to six months still. This is their latest position. So, we definitely want to pursue this further.”

A consumer redress scheme, such as the one set up for Arch Cru victims in 2012, would compensate steelworkers for the unsuitable advice they received to transfer out of their pension scheme.

It would establish a simpler process for those wishing to claim, with the FCA deciding the scope and timing of the scheme.

The FCA's board said at a meeting in July discussions were held around the available options for securing redress for scheme members. But it concluded it did not have sufficient information to make a decision on a broad brush redress scheme at the time.

Earlier this month, the FCA told FTAdviser “whether or not we undertake a redress scheme is under review and analysis”.

Three tests

Smith wrote to the regulator back in August asking about the FCA’s powers under the Financial Services and Marketing Act 2000, particularly section 404 which allows it to implement a consumer redress scheme.

Sheldon Mills, executive director of consumers and competition at the FCA, responded the same month explaining there were three key tests which must be met before this power can be used.

Firstly, the FCA must see that there may have been a widespread or regular failure by relevant firms.

Then, as a result of this failure, consumers have suffered a loss and if they brought legal proceedings a remedy or relief would be available.

And lastly, the FCA has to consider that it is desirable to make rules for the purpose of securing such a redress scheme.

In the letter, Mills said creating such a redress scheme would be a "significant intervention in a market" and could have "far reaching consequences".

Mills said: “We must rigorously assess whether the legal test for using this power would be met in any particular case. We do not yet consider that we have sufficient evidence to determine widespread or regular failure in this case so we are undertaking further file reviews.

“The results of these reviews will be considered alongside the evidence that we have already collated from a number of internal and external sources, including intelligence obtained from discussions with members and data from the Financial Ombudsman Service and the Financial Services Compensation Scheme.”

He added: “Once we have reached a robust position in relation to the first two conditions, under the third test we are required to make an objective, evidence-based judgement on the overall appropriateness of a consumer redress scheme as a remedial tool.

“To do this, we are undertaking further work to understand the potential impact the use of this power could have on the wider market and on pension freedoms.”

Timing issues

But Smith is worried that time is running out for the scheme to be put in place as many steelworkers are coming close to the six-year statutory limit for bringing claims.

Limitation periods start from the 'date of accrual of the cause of action'- the first time it was possible to lodge a claim - and last for six years.

Smith said: “This is one of the things that we have been mindful of, the time, when we've had to sort of push and drive the FCA, and the other agencies and regulators along all the while in this campaign.”

He added campaigning to find more time for steelworkers was on his mind.

Smith said: “We've concentrated on the redress and trying to get that sorted first of all, so [timing] could be a next avenue for us to go down.

“Because clearly, it would be hugely unfair if people were timed out because regulators were too slow responding to steel workers’ long-standing complaints.”

When asked whether lessons have been learnt from the BSPS saga, Smith said not currently because this has issue has been rumbling on for so long that different aspects and other issues kept popping up.

Smith said: “First there was the question of how this occurred in the first place and then trying to understand it and to make amends.

“As you go along, you realise the hoops that steelworkers have had to jump through to get justice and how much support they need, because they are steelworkers and they haven't had the financial backgrounds that others have.

“It's highlighted the amount of consumer support which is necessary, and then you come to whether the regulators are fit for purpose in terms of the support they give.”

Latest figures from the FSCS showed it has paid out £21.5m in total so far to members of BSPS who were wrongly advised to transfer their defined benefit pensions.

The lifeboat scheme told FTAdviser it had made 482 decisions, including decision rejecting the claim, with an uphold rate of 88 per cent.

The average compensation has been £50,000 but the overall compensation amount could be set to grow significantly as the FSCS still has 135 claims in progress.

The BSPS case

Three years ago British Steel Pension Scheme members were asked to decide whether to move their DB pension to a new plan, BSPS2, or stay in the existing fund, which was then moved to the PPF as part of a restructuring of pension liabilities, or to transfer out altogether.

As a result about 8,000 members transferred out of the old scheme, with transfers collectively worth about £2.8bn.

But concerns about the suitability of the transfers were soon raised, leading to intervention from the FCA that resulted in a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.

A subsequent suitability review led to almost two-thirds of DB advisers quitting the market, with the FCA saying there are now about 1,200 advisers holding these permissions compared with 3,000 in 2018.

NOTE: We claim no right or title to this article which appears in FT Adviser dot com. Author Amy Austin.

If you were / are a British Steel employee and feel you have received poor pension advice, mis-sold your pension and ultimately lost money of pension benefits contact Claimline Legal today. Call us on 0800 779 7457 or go to our website







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