The Financial Conduct Authority (FCA) has clamped down on Weymouth-based KBFS Financial Limited after they failed to pay compensation to former British Steel Pension Scheme members.
While SIPPs are suitable for many investors, transferring from a final salary or defined benefit pension scheme is rarely advised. This is because the benefits offered by such schemes usually outweigh what can be achieved by investing in a SIPP. Transferring a pension also incurs fees, which means the new scheme would have to achieve even higher returns to cover these.
Many people who worked in public sector or nationalised industries have been persuaded to transfer out of their final salary pension scheme and, as a result of negligent financial advice, have invested in high-risk or unsuitable funds as part of their new Self Invested Personal Pension, and lost out financially.
The most highly publicised pension scandal relates to former British Steel workers, with the Government’s Public Accounts Committee reporting on the cost to pension holders and the FCA’s failure to oversee independent advice firms since pension freedoms were introduced in 2015. The Financial Times has reported that:
- 7700 former steelworkers were affected
- £2.8 billion was transferred out of the scheme
- 53% of transfer recommendations have been found to be unsuitable
- The average cost of compensating each person affected has been estimated at £45,000
- The FCA’s compensation scheme relates to advice given between 26th May 2016 and 29th March 2018
Whilst these transfers were made many years ago, it is still possible to claim compensation if you received unsuitable DB transfer advice. Even if you are the widow(er) of someone who transferred their pension, or if the Independent Financial Adviser (IFA) has gone out of business, has been taken over or changed its name, it is still worth finding out if a claim is possible.
“Even though the British Steel Pensions scandal has been in the news for years, there are still independent financial advice firms going out of business on a regular basis. If they are unable to pay compensation to their clients, they often have no option but to declare the firm illiquid, enter into administration and close their doors.
Once that happens, it is possible to claim compensation from the Financial Services Compensation Scheme (FSCS), a lifeboat scheme which can award up to £85,000 in compensation.
I would urge anyone who transferred out of a defined benefit pension scheme into a SIPP – and lost out financially as a result – to get in touch with our team.”
If you are concerned that you or a loved one were not given the right advice about leaving a final salary or defined benefit pension, please call us on 0800 169 5925 or complete one of the forms below. 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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