Police in South Wales, where Tata Steel’s Port Talbot works are based, have begun an investigation following concerns about the financial advice given by pension advisory firms to members of the British Steel Pension Scheme.
“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,” a police spokesperson said in a statement on Friday.
Tata Steel offloaded the pension scheme last year, as part of a restructuring to ensure a viable future for its European steel operations. Last week, Britain’s financial regulator, the Financial Conduct Authority said it was continuing to look into concerns expressed by members of the BSPS about the suitability of the advice they received about transferring out of it following the restructuring. So far, eight firms have stopped advising pension scheme members following the FCA investigation.
‘Grossly inadequate’
The government-backed Pension Advisory Service has set up a dedicated helpline for members of the scheme.Concerns about the advice given to members of the scheme have been building since last year. Last week, Frank Field, the Chair of the House of Commons work and pensions committee criticised the FCA’s “grossly inadequate” action on the BSPS members’ concerns and that the developments highlighted the risk of “sleepwalking” into a huge misspelling scandal.
The committee highlighted the instance of one firm, Active Wealth, which had advised over 300 clients on BSPS transfers.
The committee criticised the fact it had taken the FCA 14 months to require Active Wealth from ceasing to advise on new pension business, just weeks before the original decision for BSPS members to make a decision on their pension. “From their intervention in this affair it seems clear that the FCA's actions still effectively protect these businesses' ability to make money out of pension funds, rather than protecting pension savers,” warned Field.
In August last year Tata Steel UK reached an agreement with the Trustee of the British Steel Pension Scheme and UK authorities to offload the £15 billion pension scheme, via a regulated apportionment arrangement, a restructuring mechanism that allows an employer under financial pressures to detach itself from its pension liabilities. At the time Tata Steel hailed the development as one that would help it towards a “sustainable and enduring future,” while unions welcomed the agreement, and the plans for a new Tata-backed scheme. Members of the scheme could transfer either to a Tata Steel-backed scheme, remain with the existing scheme, which would move into Britain’s Pension Protection Fund, or enrol in a private pension scheme.
