British Steel Pension Scandal: Advisory Firm Enters Default with 35 Claims
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The British Steel pension scandal is one of the most well-known pension mis-selling cases in the UK. Over the course of several years, hundreds of clients lost money, thanks to poor financial advice. Various advisory firms have been caught up in the situation, and the latest to hit the headlines is Pembrokeshire Mortgage Centre (previously County Financial Consultants).
Here’s some more information about the company, and what action to take if you’ve been affected by their actions.
Unsuitable pensions and inadequate advice
Pembrokeshire Mortgage Centre were one of many firms that provided financial advice to British Steel employees. They recommended new pension products to many of their customers, which were later found to be unsuitable. As a result, some clients lost thousands of pounds from their pension pot.
In 2017, the company stopped offering pension transfers. The following year, they ceased dealing with pensions completely. However, they were still providing advice on other sorts of investments. This in itself is problematic, given their track record.
Pembrokeshire Mortgage Centre finally went into liquidation in 2020.
Compensation pay-outs for affected customers
The firm was finally placed in default in January 2021, after 35 claims were made against it. Now that it’s been declared in default, the Financial Services Compensation Scheme (FSCS) can start compensating clients for their losses. The total amount of compensation has yet to be announced.
This is good news for those that have been affected by the pension mis-selling scandal. However, this case highlights a broader concern for the industry – regarding firms that continue to offer financial advice, even when complaints have been made against them.
A need for tighter regulations?
Recent FCA data revealed that many financial advice firms had opted out of the pension transfer market in the last five years. This is largely due to the fact that the spotlight has been on pension mis-selling, and companies are wary of coming under fire for offering unsuitable advice.
It’s unsurprising, given how many firms were caught up in the British Steel scandal. Of the approximately 1,300 companies still active, 254 of them had recommended their clients to transfer from the British Steel pension to a personal pension product. That’s a staggeringly high number – with 19% of companies involved.
The rising problem of phoenixes
Phoenixing is also a major problem. The term refers to the practice of a financial firm’s company director closing their company (without accepting any liabilities), only to set up another company soon afterwards.
The FCA claim that they’re going to address this issue, but some believe it’s taking too long. For example, one industry expert commented: “The FCA claims to take a robust stance in relation to directors who use liquidation to deliberately avoid paying compensation following claims arising from poor advice. However, in reality, we have already seen several directors of firms involved in BSPS phoenix into other firms, and despite reporting it to the FCA, business continues.”
Are you eligible for compensation?
Pension mis-selling can be financially devastating. If you’ve transferred your pension in the past, ask yourself the following:
- Were you provided with a range of options (including keeping your workplace pension)?
- Were you given enough information about the new pension?
- Were you told about the financial risks involved?
If you answered ‘no’ to any of the above, it’s likely you were mis-sold to. To find out if you can make a claim, get in touch with Goodwin Barrett today by calling 0808 163 1659 today or e-mail us at enquiries@goodwinbarrett.co.uk.
