The Financial Services Compensation Scheme (FSCS) has paid out more than £1 million to former clients of a firm that gave pension transfer advice to members of the British Steel Pension Scheme (BSPS).
Clients of Active Wealth (UK) will receive 'higher levels' of compensation because the FSCS will refund the cost of seeking new advice to exit unsuitable investments they were recommended at the time. The amount a client can claim will be capped, although the FSCS has not yet set where this cap will be.
However the lifeboat fund will not compensate clients for ongoing advice charges they will incur.
'Our remit is to put people back in the position they would have been had they not been mis-advised rather than compensate for the costs of future investments and any advice charges associated with them. To provide fairness and consistency with all other claims we do not therefore believe it is appropriate to fund new, ongoing costs,' the FSCS said.
Active Wealth (UK) was the first firm to suspend its transfer permissions in 2017 when transfers out of the BSPS were at their highest levels.
Today the FSCS said it has now paid out £1.1 million to former clients of the business after it was declared in default last year. This included compensation to members of the BSPS who transferred out of the scheme.
FSCS chief executive Mark Neale (pictured) said: 'We have strong sympathy for the plight of the members of the defined benefit pension schemes who were badly let down by Active Wealth (UK) and other advisers. We want to achieve fair compensation for them and hope these changes to our approach will go some way to helping them get back on track. We are also keen to hear from any BSPS member advised by Active Wealth (UK) who has yet to make a claim to FSCS – we are a free service to consumers, and stand ready to help.'