The British Steel pension scandal is one of the most publicised cases of mis-selling in recent years. Numerous employees were left out of pocket as a result of bad financial advice, and to this day, are still seeking compensation for their losses.
The Financial Ombudsman Service has now ordered those responsible to compensate these workers. Here’s some information about the ongoing situation.
Back in 2017, British Steel employers were asked to make a major financial decision – either transfer their existing workplace pension to a new pension scheme, or stick with their current fund.
Close to 8,000 workers chose to transfer; a move that was worth around £2.8billion in total. Many of them had been advised to do so, as the new pension product was presented as the more lucrative option.
However, it soon came to light that the new pension was unsuitable for many of the British Steel employees, and several lost money as a result.
The case was examined in depth by the FCA, and after their investigation, they stated that 10 of the companies involved could no longer offer a transfer advice service.
This was only a temporary measure, though. Some of these businesses, such as County Capital Wealth Management and Mansion Park, regained their permission just a few months later.
Mansion Park – finally paying the price
It now seems that Mansion Park’s luck has run out. In November 2020, the FOS ordered them to pay out compensation, based on their conclusion that the advice offered to a client was an ‘unbalanced representation’ of their options.
The client in question claimed that he’d felt pressurised to transfer his pension, and that no-one had checked his suitability for the new pension product. Mansion Park protested the statements, and said that they’d assessed the client’s circumstances and run through all the options with him.
However, the FOS found ‘fundamental flaws’ in Mansion Park’s response. The Ombudsman dealing with the case commented: “I cannot agree with Mansion Park’s comment that the combination of the lump sum death benefit and the lack of need that (the client) would have for the pension would mean that there was no justification in not transferring. I take the opposite view.”
What counts as mis-selling?
Pension mis-selling is a growing problem, and increasing numbers of people are seeking compensation for their financial losses. Here are a few indications that you might have been mis-sold to:
- You weren’t told about the risks. Most investment products come with a level of risk, and this should have been carefully explained to you.
- You didn’t understand the nature of the pension product. All the details should have been outlined carefully. If you felt confused; that’s the advisor’s fault, not yours.
- Your personal circumstances weren’t examined. It’s the advisor’s responsibility to check the pension product is suitable for your needs. In order to establish that, they first need to understand your circumstances, and your financial plans for the future.
- You were hassled into transferring. Good financial advice should always be impartial, and designed to help you make the best possible decision. If you felt pressurised into transferring your DB pension, this counts as mis-selling.
What to do if you’ve been mis-sold to