The Financial Services Compensation Scheme says it will change the way claims against British Steel IFA Active Wealth will be calculated for reasons of fairness.
In an update today, the lifeboat fund says the change is to ensure full and fair compensation for former members of the British Steel Pension Scheme.
The development follows meetings with steelworkers, their representatives and MPs. In November 2018 MP Stephen Kinnock and MP Nick Smith met a number of constituents affected by the BSPS saga.
Last year, the FSCS declared Active Wealth in default, as it was unable to pay claims against it.
To date, the FSCS has paid around £1.1m in compensation to former Active Wealth clients, including the former BSPS members.
The FSCS says Active Wealth and other IFAs wrongly advised British Steel workers to transfer their pension from a British Steel defined benefit scheme into Sipps holding other investments.
To improve the compensation for claimants, the FSCS confirms it will compensate for the up-front cost of professional advice on re-investment options for those members who remain in the Sipp wrongly recommended by Active Wealth.
The FSCS says this measure recognises that members will want to exit the investments wrongly recommended.
Already decided on claims will also be review with an up-to-date transfer value used in the FSCS’s calculations.
There will be compensation for ongoing adviser charges in accordance to the FCA’s DB transfer consultation guidance.
But they will not be compensating for additional adviser charges above ongoing annual charges.
The lifeboat fund says the decision will 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.
Therefore to provide fairness and consistency with all other claims, the FSCS does not believe it is appropriate to fund new, ongoing costs.
Outgoing FSCS chief executive Mark Neale says: “We have strong sympathy for the plight of the members of the defined benefit pension schemes who were badly let down by Active Wealth and other advisers.
“We want to achieve fair compensation for them and hope these changes to our approach will go some way to helping them get back on track. We are also keen to hear from any BSPS member advised by Active Wealth who has yet to make a claim to FSCS – we are a free service to consumers, and stand ready to help.”