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UK Lawmakers Say FCA Failed to Protect Pensions of Steel Workers

·1 min read

(Bloomberg) -- UK lawmakers have slammed the Financial Conduct Authority, saying the markets regulator failed to protect British Steel Pension Scheme members who lost their life savings from unscrupulous financial advisers.

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The FCA was “consistently behind the curve,” had “inadequate oversight of the firms involved,” and “failed to take preventative action to protect consumers,” according to a report published by the Public Accounts Committee on Thursday.

The report said the redress process of the regulator also proved ineffective, with one fine issued so far and many have not been compensated fully. For those whose advisors have entered insolvency, £21 million ($25 million) in compensation has been lost due to financial limits, the report said.

Almost 8,000 members chose to transfer out of the BSPS around the time of a 2017 restructuring, with the average individual losing £82,600 after taking unsuitable advice from advisers incentivised by fees, according to a March 2022 National Audit Office report. Current Bank of England Governor Andrew Bailey oversaw the FCA at the time of the scandal.

“Even with 2 years lead time the organization was unprepared,” Meg Hillier, chair of the Public Accounts Committee, said. “First for the systematic mis-selling that robbed thousands of their life savings and retirement plans, then in coming up with a redress process which is hard for those affected to navigate.”

The regulator laid out plans in March to compensate former members of the pension plan, after finding almost half of the advice given to steelworkers by financial advisers was unsuitable. The FCA said it expects £71.2 million of compensation to be paid to individuals who lost out after exiting the defined benefit plan.

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