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Police in south Wales are probing allegations that steelworkers at Port Talbot were victims of pension fraud.
The complaints, lodged by members of the British Steel Pension Scheme,
came as a regulatory review found only half of pension transfers made by
steelworkers at the Tata UK plant were suitable.
They include allegations that some members were deceived and misled by
financial advisers into investing six-figure pension pots into
unsuitable and high-charging funds.
The Financial Conduct Authority is already probing concerns that pension
changes affecting around 130,000 members of the Tata retirement fund
appeared to have led to a “feeding frenzy” for rogue advisers.
As part of a deal struck last year to keep Tata UK afloat, members
belonging to the £15bn British Steel pension fund were given the option
to shift their assured benefits to the Pension Protection Fund, join a
new retirement scheme backed by Tata, or transfer to personal pension
funds.
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“South Wales Police is aware of recent media reports surrounding a
pension scheme concerning steel workers at Port Talbot and is currently
reviewing certain information that has been brought to our attention,”
the force said in a statement to the Financial Times.
Police did not disclose how many complaints had been lodged by steelworkers or how many advisers were the subject of complaints.
“It would be inappropriate to comment further at this time,” said South Wales police.
The FCA also disclosed that only half of the steelworker pension
transfers it had reviewed recently had been suitable for the individuals
involved.
Of the 129 cases reviewed, taken from across 21 advisers, 33 per cent
were deemed unsuitable. In 16 per cent of cases, it was unclear to the
regulator whether the advice was suitable.
The FCA considers an “unclear” rating to be a breach of its rules as the
firm has not taken reasonable steps to ensure the personal
recommendation was suitable for the customer.
“We are contacting these firms to set out our concerns; however, of the
21 firms, we have seen no evidence of funds being invested in scams,”
said Andrew Bailey, chief executive of the FCA, in a letter to the
Commons work and pensions committee, released on Thursday.
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The development came a week after the FCA revealed that eight
independent financial advisers had had their pension transfer advice
activities restricted following concerns about the suitability of their
advice to steelworkers.
“Our work on BSPS is not finished, and we are continuing to take action where we have concerns,” said the FCA.
The FCA said its work so far had accounted for 1,766 BSPS transfer cases, or around 90 per cent of all BSPS transfers to date.
Alastair Rush, of Echelon Wealthcare, a Rutland-based IFA, said advisers
should make their clients aware of charges on investments recommended
for their pension fund and ensure they were suitable for their risk
profile.
But Mr Rush said this had not been the case with the transfers he had reviewed.
“Not only should they not have transferred out, but the funds are highly unsuitable and chronically expensive,” said Mr Rush.
“There are lock-in clauses which result in them losing 5 per cent of
their fund value should they transfer out. I have spoken with between 50
and 60 steel workers who stand to lose 5 per cent of their fund size
(average £350,000), or be exposed to cost approaching 10 per cent of
their fund sizes each year”.
Mr Rush claims that 150-250 BSPS members, each with between £300,000 and
£700,000 in pension cash to invest, may have fallen victim to a rogue
adviser.
