Redress paid out by the Financial Services Compensation Scheme (FSCS) to clients of collapsed British Steel firm Active Wealth UK has now surpassed the £1m mark.
To date, the lifeboat fund has paid out £1.1m in compensation to former Active Wealth clients, including former members of the British Steel Pension Scheme (BSPS).
The FSCS has also revealed it is using an up-to-date transfer value to calculate the steelworkers redress, and had chosen to partially compensate them for their ongoing adviser charges.
The lifeboat fund told RP’s sister title Professional Adviser it always takes account of adviser charges (incurred or projected) in its methodology when we calculate the value of the pension rights foregone. In these cases additionally, it is compensating the steelworkers for any adviser charges incurred by BSPS members whose retirement savings remain within the funds recommended by Active Wealth as they will want to move their funds out and will want advice to do this.
However, it decided not to compensate for any charge for any future investments.
“Our remit is to put people back in the position they would have been had they not been mis-advised, rather than compensate for the costs of future investments and any advice charges associated with them,” the FSCS said.
“To provide fairness and consistency with all other claims, we do not therefore believe it is appropriate to fund new, ongoing costs.”
A visit to Westminster
In November last year, adviser Alastair Rush and solicitor Philippa Hann, who have been working with the steelworkers, alongside a a group of steelworkers headed to Westminster to meet with FSCS chief executive Mark Neale, as well as senior players at the Financial Conduct Authority and a handful of MPs.
At the time, Rush and Hann asked the FSCS to look at the discount rate used by the lifeboat scheme to calculate compensation, the advice fees paid by the steelworkers, and the FSCS’s take on the value of the workers’ pension pots.
Transfer ‘a no brainer’
Active Wealth UK wrongly advised British Steel workers to transfer their pension from a defined benefit (DB) scheme to a self-invested personal pension (SIPP).
In February 2018, Active Wealth UK entered liquidation, and shortly afterwards compensation claims began flooding into the lifeboat fund.
Steelworkers told Professional Adviser they had not been asked to fill out risk questionnaires until the end of the advice process, and only then were asked to “keep the FCA happy”. They were also told a DB transfer was a “no-brainer”.