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Steelworkers pension compensation may open floodgates for Defined Benefit transfer claims

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City watchdog, the Financial Conduct Authority (FCA) wants to order financial advice firms to review the service they gave to steelworkers and be ready to pay compensation to those wrongly encouraged to transfer their defined benefit (DB) pension.

It has been estimated that around 1400 steelworkers will receive over £71 million in compensation as result of a recently proposed redress scheme. A public consultation about the scheme will run until 30th June 2022, following which responses will be reviewed and reported, a decision will then be made as to whether the scheme will go ahead.

If the scheme is implemented, it is expected that a final draft of the redress scheme will be available towards the end of 2022, with compensation being paid by early 2024.

The role of the Government-backed FCA is to regulate the conduct of financial services firms and enforce the rules that protect their customers. Complaints about the British Steel Pension Scheme were so widespread, with almost half of the pension transfers completed regarded as unsuitable, the FCA stepped in and proposed a consumer redress scheme. The scheme will apply to all steelworkers who were advised by financial services firms to transfer their pensions between 26 May 2016 and 29 March 2018. Importantly the scheme covers not just the firms subject to regulatory and enforcement action taken so far.

In anticipation of the scheme, the FCA has also introduced emergency powers to prevent financial services firms from disposing of assets that would mean they could no longer afford to pay compensation to any eligible steelworkers.

Many industry commentators have suggested that the British Steel Pension redress scheme may lead to a significant increase in claims for compensation following unsuitable Defined Benefit (DB), sometimes known as final salary or company pension, transfers in other industries.

It is rarely good advice to transfer out of a DB pension scheme as they are such a secure and dependable source of retirement income for many people. TLW Solicitors specialise in dealing with unsuitable DB transfer cases across a wide range of industries impacted by this issue. There are many different DB pension schemes, potentially affecting a large number of people, many of whom have lost thousands, so there is significant scope for claims to be made in the future.

TLW’s Head of Professional Negligence, Sarah Spruce, said:

“The FCA are trying to find a fair and workable solution for all those steelworkers affected by the pension transfer scandal. As we have said before, we would urge any former British Steel worker to get advice on whether or not their pension transfer advice was suitable. Given that we deal with DB transfer compensation claims across a range of both private and public sector pensions schemes, we will have to wait and see if the floodgates do really open.”

TLW Solicitors act on a ‘no win, no fee’ basis and our experienced team can help you through the claims process. Normally, claims are made to the financial advisory firm in the first instance. If unsuccessful, the Financial Ombudsman Service, which deals with complaints between financial companies and their customers, can review the case.

Where a firm has gone out of business, redress can be sought from the Financial Services Compensation Scheme, which is Government-backed and set up to help those who have lost out due to failed financial firms. In certain cases, we can advise on starting Court proceedings where necessary.

If you are concerned that you or a loved one were not given the right advice about leaving a final salary/Defined Benefit (DB) pension, please call us on 0800 169 5925 or use our online form and our team will contact you for an initial, no-obligation consultation.

It is important to get advice as soon as possible as strict time limits can apply.

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