Thousands of British steelworkers lost an average of £82,000 because "unscrupulous" financial advisers profited from giving bad advice - while a watchdog failed to protect them, a scathing new report has found.
An investigation published today ruled that the Financial Conduct Authority (FCA) failed to protect the British Steel pension scheme - with some members missing out on as much as £489,000 in life savings.
An estimated 7,800 transferred money from their defined benefit pensions after listening to so-called experts who were "financially incentivised to provide unsuitable advice".
The former British Steel staff were ripped off after Tata Steel - which took on pensions liability - was restructured in 2017.
A bruising report by the Public Accounts Committee (PAC) outlined huge failings at the FCA, which failed to take action to protect workers.
The watchdog was "consistently behind the curve", leaving victims open to manipulation, the PAC found.
A Labour MP has caused for rogue financial advisors to be prosecuted as a result of the scandal.
Nick Smith, MP for Blaenau Gwent, told The Mirror: "I have been pushing for the FCA to look into introducing a redress scheme for those affected, believing this to be the best means of compensating those who lost out.
"I’m glad to say a consultation is currently taking place. Whilst it’s been like pulling teeth, I hope final agreement on a fair redress scheme will put things right for steelworkers.
"Also, I believe the FCA needs more teeth to act against those who carry out this sort of behaviour. Strong action taken against rogue advisers would be a deterrent and a warning to other bad actors.
"I think these sort of cases warrant not just financial penalties and industry bans but also criminal prosecution. There is a Bill coming up in the autumn which I will seek to amend to give the FCA much stronger powers."
The PAC report states: "Despite being aware of the potential risks to consumers caused by new legislation in 2015, it failed to take preventative action to protect consumers."
The cross-party committee found the FCA "failed to identify the scale of the issue", and has only issued one fine in connection with the scandal.
Mr Smith, who led the campaign for justice, said: “Steelworker pensioners came to me four years ago telling me they had been ripped-off and were worried that no one was there to help.
"This report shows how badly they were treated, and where the FCA failed to support them in their hour of need."
Labour MP Dame Meg Hillier who chairs the committee, said: “Whatever your views on the pension freedoms introduced in 2015 they clearly came with significant risk - yet a full two years later the FCA was still behind the curve when the British Steel pension scheme was opened up for unscrupulous financial advisors to transfer steelworkers’ life savings out of a gold-plated scheme and into whatever ‘investment’ would produce the highest advisor fees."
The thousands of steelworkers, mainly from South Wales, transferred a total of around £2.8 billion from the British Steel scheme during the overhaul.
Many have not received the full compensation they are owed after taking action through the Financial Services Compensation Scheme (FSCS), the PAC report states.
An FCA spokesperson said: “The circumstances around British Steel Pension Scheme transfers were exceptional, and we know that many members lost out due to poor advice. We will carefully consider the recommendations of the report and respond to the committee.
“We’ve proposed a scheme which should see advice firms pay over £70 million of compensation to steelworkers. That’s in addition to over £70 million which has already been paid out. And people affected don’t have to wait for the scheme to be in place to make a complaint.
“We’ve also made sure that only firms with the right skills and experience can provide advice on pension transfers in future – over 700 firms have stopped doing so due to our work. We’ve also learnt real lessons for the future, including improving how we work with other regulators.”
