British Steel pension scheme members were targeted by “vulture” financial advisers after Indian firm Tata was allowed to offload its retirement fund, according to a report published today from the British government’s Work and Pensions Select Committee.
The parliamentary committee’s inquiry found many British Steel pension members had been “exploited for cynical personal gain by dubious financial advisers in tandem with parasitical so-called ‘introducers’”.
Tom McPhail, Hargreaves Lansdown’s head of policy, said: “It is extraordinary that even after the pension mis-selling scandal of the 1990s, the members of the British Steel scheme could be let down so badly.
“The scheme trustees and administrators should surely have taken more responsibility for protecting members interests and shielding them from unscrupulous advisers.”
He continued: “Contingent charging, where the adviser is actively incentivised to recommend a transfer, creates a glaring misalignment of interest between adviser and their client; it would be remarkable if it didn’t lead to at least some mis-selling.”
Tata announced a restructuring of the £14bn fund in 2017 to bolster its ailing British operations afloat.
Yet today’s report, which focuses on the closure of the British Steel Pension Scheme (BSPS) reveals the British authorities and Tata both failed to protect some 124,000 members from a “major mis-selling scandal.”
The British government has yet to issue its response to the claims put forward in the Work and Pensions Select Committee’s report.
A Financial Conduct Authority (FCA) spokesman said: “We believe the committee’s recommendations are sensible. We are currently looking at the Register to see how we can make it easier to use. We are also reviewing the rules that apply to firms advising on pension transfers, and will consider this report as part of this.”