A panel of MPs in Britain have criticised Tata Steel, the U.K. Government, the financial services and pensions regulator and others over a pensions mis-selling scandal that led to members of the British Steel Pension Scheme being “exploited for cynical personal gain.”
‘Concerns on advice’
The report relates to concerns around the financial advice provided to members of the pension scheme by pensions advisory firms. Last year an agreement was struck with U.K. pension authorities, following much negotiation and the payment of half-a-billion pounds and an equity stake, which will separate the £15-billion British Steel Pension Scheme (BSPS) from Tata Steel U.K., improving the company’s economic viability.
Concerns began to swiftly mount late last year, over the advice given to members by pension advisory firms on whether to remain with the existing scheme (which will enter the Pension Protection Fund, the government scheme that covers members of pension scheme that falls into insolvency), or transfer to a new defined contribution scheme being set up by Tata Steel or transfer into a third party scheme.
“Many BSPS members were shamelessly bamboozled into signing up to ongoing adviser fees and unsuitable funds characterised by high investment risk, high management charges and punitive exit fees,” said the report by the House of Commons Work and Pensions Committee published on Thursday.
It warned of another “major mis-selling scandal,” as it pointed to a catalogue of failures that “created perfect conditions for vultures to take advantage.” The report criticised the U.K. financial services regulator, the FCA, for the time it took to begin investigating the matter, but also reserved its criticism for the handling of the situation by Tata Steel.
