British Steel Pension Scheme: Transfers

Chris Elmore Excerpts

Wednesday 10th April 2019 Westminster Hall

[Nick Smith]

The advice is there. The difficulty is that for many people it is too technical and complicated; working through it is really very hard.

Transfers were talked up, and pension sharks soon began circling around the key steelworking sites across south Wales and the rest of the UK. They were often facilitated by unregulated introducers, through word of mouth. For example, constituents of mine were approached by a rogue financial adviser at their caravan while they were on a family holiday. Wider possibilities were common currency: a place in the sun, a conservatory and a deposit for a son’s or daughter’s new home were all said to be within reach.

The pension changes meant that it was easier to transfer from a stable fund into investments that were far riskier, on the promise of better returns. Unfortunately, it meant that a safe bet could turn into a bad bet, and a high fee was often part of the deal too. It was the case that 7,800 steelworkers transferred out altogether, of whom 872 had transfers arranged by firms that were eventually ordered—ordered—to stop advising by the FCA. One steelworker lost £200,000. Many others lost tens of thousands of pounds. Many suffered incredible stress and anxiety. I heard yesterday that £1.8 million has been paid out in compensation to steelworkers so far. I emphasise the words “so far”. Because that might not grasp the full scale of the issue, the FCA has now reviewed the files of 2% of the nearly 8,000 steelworkers who transferred out. It found that 58% of the advice was not suitable, which means that the tally of those who lost out could run to several thousands. To deal with that possibility, the FCA now needs to set out a clear programme of how it will identify the steelworkers affected, how it will let them know and what practical support it will provide to help to get them through this process.

[Chris Elmore (Ogmore) (Lab)]

I pay tribute to my hon. Friend for securing this debate and leading on this issue, as he has now for several years. On how the FCA now informs steelworkers, does he agree that part of the problem is that lots of steelworkers will simply not know that this has happened and will not understand that they have received bad advice? Given that these are complicated issues, as he has mentioned, that means that they will often just ignore the issue in the hope that it will somehow resolve itself. This could be yet another pension scandal waiting to happen, purely because people do not wish to face up to the realities of what is happening.

[Nick Smith]

My hon. Friend makes a really good point. The FCA is a large organisation based in London. I believe it does not have sufficient resources to help consumers on the ground in places such as Port Talbot or Shotton, or across the country, where pensioners need support at their homes.