The Financial Services Compensation Scheme has set out how claims against British Steel IFA Active Wealth will be calculated.
The lifeboat fund declared the firm in default at the end of March and has been handling claims since then.
A note on the FSCS website says any compensation will be based on comparing the benefits available to a claimant had they transferred to the new British Steel scheme and the current value of their new pension.
The note adds the lifeboat fund has examined claims against Active Wealth and considers it breached duties under conduct of business rules to ensure a personal recommendation is suitable for the client.
According to the FSCS, the advice to transfer in some of the cases was unsuitable due to the nature of the accrued benefits that could have been carried forward into the new British Steel scheme.
These are unlikely to be matched through the private arrangement Active Wealth recommended.
So far, there have been 29 claims in total with 16 relating to a transfer to a personal pension and seven to a Sipp.
Three relate to other pensions advice and another two relate to collective investment schemes, one regulated and the other unregulated.
Clarke Willmott partner Philippa Hann, who represents a number of claimants taking legal action against Active Wealth, says: “This is a welcome update from the FSCS and the basis of the compensation is what I would expect.”
She says: “We agree the advice to transfer the steel workers into Sipps was unsuitable. We are instructed to forward over 40 claims to the FSCS on behalf of Port Talbot Steel workers.”