Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

From chicken & chips to Kinnock & Sipps: an A-Z of British Steel

We have rounded up all the key issues concerning the British Steel saga in this helpful A-Z guide. Click on to read more.

A is for Advice

Fittingly, advice is at the forefront of this story and at the top of this list. 

There are many, many stories of bad (and good!) advice at the heart of the British Steel saga, but here is a particular highlight. 

Last month Aberavon MP Stephen Kinnock revealed to us that one of his constituents had had a 'financial adviser' in his front room a whopping seven times.

With individuals like that building such rapport, it was arguably no wonder that the regulatory hotlines and guidance bodies struggled to keep up. 

 

A is for Advice

Fittingly, advice is at the forefront of this story and at the top of this list. 

There are many, many stories of bad (and good!) advice at the heart of the British Steel saga, but here is a particular highlight. 

Last month Aberavon MP Stephen Kinnock revealed to us that one of his constituents had had a 'financial adviser' in his front room a whopping seven times.

With individuals like that building such rapport, it was arguably no wonder that the regulatory hotlines and guidance bodies struggled to keep up. 

 

B is for the British Steel Pension Scheme

The story of British Steel has had one huge thing at its heart: the £15 billion British Steel Pension Scheme (BSPS).

In May 2017 Tata, which owned the BSPS, reached an agreement to move the scheme off its books. This followed a year of talks with The Pensions Regulator. 

Trustees backed the plan to sepearate the scheme from Tata even though it would cause reductions for many members. The decision did mean the scheme would not fall on the lifeboat fund the Pension Protection Fund, however. 

You can read more about this here.

C is for Chicken and Chips

One of the stranger stories to emerge from the BSPS scandal was the accusation that an unregulated introducer had served 'chicken and chips' dinners to British Steel workers in order to persuade them to transfer out of their pensions.

However, Celtic Wealth accused the media and others of 'scaremongering' about the business and its dealings with members of the British Steel Pension Scheme. It went so far as to clarify that the food served to workers was sausages and chips, not chicken and chips.

Celtic Wealth are still technically active according to Companies House, but they have repeatedly declined our requests for an interview. 

 

D is for Deadline

One of the key problems discovered by MPs when they investigated the British Steel saga was the time pressure workers were under to decide what to do with their pensions.

Should they move into a second BSPS pension or transfer out entirely?

Eventually, workers were granted an extension to the transfer deadline, though this was not before a backlog of requests for financial advice had emerged. 

E is for Echoes

Some of you may have read our coverage of British Steel and thought: 'this is exactly like every other financial scandal.'

We are tempted to agree. It has echoes of previous scandals, particularly those concerning pensions. 

We think the common factors include:

  • A new situation about which consumers must decide
  • Massive pension liabilities
  • Time pressure
  • Vulnerable consumers
  • Unscrupulous operators
  • Slow regulatory action 

F is for Frank Field

He may be the oldest member of Labour's awkward squad, but he certainly should not be underestimated. 

Birkenstead MP Frank Field has been all over our screens taking regulators, policy makers and fellow politicians to task over the British Steel scandal.

Indeed, a particularly sparkling moment occurred when he accused the Financial Conduct Authority (FCA) of 'fiddling while Rome burned.'

You can read more about that here

G is for 'grossly inadequate'

Before Frank Field had gotten as far as publishing his damning verdict of the regulator's supposed incompetence, he was writing strongly-worded letters to the FCA's executive director of supervision Megan Butler (pictured) accusing it of gross inadequacy.

He said:

'While the action the FCA has finally taken to protect members of the BSPS is welcome, I remain concerned that its overall approach has been grossly inadequate. The FCA is a consumer protection body. It would behove them to stop pussy-footing around and start protecting consumers.'

Ouch. 

G is also for Gallium

Steelworkers who transferred out of BSPS via collapsed IFA Active Wealth are taking legal action.

Its clients predominantly found their pension funds invested through the online platform Vega Algorithms into funds run by Newscape Capital, called 5alpha Conservative and 5alpha Adventurous.

This investment went through discretionary fund manager Gallium Fund Solutions. These investments also carried a 5% charge for leaving.

You can read the full story here

H is for Hawkins

Welsh IFA firm Bartholomew Hawkins stopped DB transfer advice altogether following a meeting with the FCA.

A requirement was placed on the Cardiff-based firm to cease all DB transfer business from 22 December 2017.

According to its entry on the FCA register, the firm had to 'immediately cease all regulated activities relating to defined benefit pension transfer business for which the Firm has Part 4A permissions.'

I is for IFAs to the rescue

It was not all bad news though.

The best of the financial advice profession was certainly on display when former infanteer turned financial adviser Al Rush (pictured above) launched a pro-bono advice rescue mission to help out British Steel workers. 

We doff our cap to you for that Al. 

J is for Jack Gilbert

Ok, so there was more than one journalist from NMA working on this story. 

But the J slot definitely has to go to senior reporter Jack Gilbert (pictured), who revealed that Frank Field had personally lobbied the prime minister about the British Steel situation, among other pension scandals. 

K is for Kinnock

Regulators 'failed completely' to spot the pension transfer advice dangers that ended up engulfing many British Steel Pension Scheme workers last year, according to Labour MP Stephen Kinnock.

The MP for Aberavon said 'mistrust' of Tata Steel made transferring look more attractive to steelworkers.

He added that Steelworkers needed 'a one-stop shop' to help them understand their options and assess approaches from advisers. Instead they were 'passed from pillar to post' and 'bamboozled'. 

You can watch our exclusive interview with Kinnock here

 

L is for Liquidation

Active Wealth (UK), the first firm to cease pension transfers as a result of advice given to BSPS  members, went into liquidation in February this year.

A notice published on The Gazette indicated a special resolution was passed on 5 February 2018 that 'the company be wound up voluntarily'. An ordinary resolution was also passed to appoint Tina Bullock of Derbyshire-based Crossfields as liquidator. 

Active Wealth found itself at the heart of the unfolding saga around defined benefit transfer advice given to BSPS members.

The spotlight turned on the business after it agreed to cease all pension transfer business, following an FCA intervention. 

M is for Mark Abley

An IFA that told MPs advisers were being subjected to 'trial by Twitter' during the British Steel pension saga volunteered to suspend his business's pension transfer business, New Model Adviser® revealed earlier this year.

A note on the FCA register entry for County Durham-based County Capital Wealth Management, which traded as the Pension Review Service and had Mark Abley as a member of staff, stated the firm will 'immediately cease all regulated activities relating to pension transfer business' from 6 February. 

You can read the full story here

 

 

 

N is for Niche IFA

Among the examples of good practice we have seen so far was Ray Adams' advice firm Niche IFA shutting its doors completely to new clients while the British Steel saga rumbled on. 

He later reopened his doors, having received 10 calls per day from steel workers asking for DB transfers at the height of the crisis.

You can listen to Ray's story in our podcast here

O is for Ombudsman

The Pensions Ombudsman was investigating over 150 complaints by British Steel members about their transfer values, we reported earlier this year.

In an update in February the Pensions Ombudsman said it was aware of issues around BSPS, which is due to fall into the Pension Protection Fund (PPF).

'As a result, we are currently investigating a group of over 150 complaints about transfer values and will shortly be undertaking another group investigation where members have complained about the early retirement factors,' it said.

 

P is for PI Insurers

As the story of British Steel continued, professional indemnity (PI) insurers were already changing their cover renewal questionnaires to root out those advisers with exposure to DB transfer liabilities from BSPS. 

Jamie Newell, managing director of PI broker O3 Insurance Solutions, told New Model Adviser® advisers were being asked three initial questions:

  • How many British Steel members has the firm provided advice to?
  • What percentage of those members has the firm advised to proceed with a transfer?
  • Is the firm continuing to offer advice to British Steel workers?

You can read the full story here

Q is for questions

Surprising nobody, MPs started raising BSPS as an issue in the chamber as soon as the potential risk to constituents became clear.

In December last year, Alex Cunningham, who was at the time Labour's shadow pension minister, asked the speaker of the house for clarity on the matter.

The full exchange is below:

Cunningham:

On a point of order, Mr Speaker. The deadline for members of the British Steel pension scheme to decide whether to join their new employers’ scheme, to have their pension paid through the Pensions Protection Fund or to make personal arrangements is all but upon them. The House will share my concerns over rogue advisers who are cold calling scheme members and attempting to part them from their hard-earned pension pots with a series of elaborate get-rich-quick schemes. One that I have heard of costs 5% of the pension pot immediately and is littered with high costs, with a further 5% fee if the person cancels their arrangement. The Financial Conduct Authority has been in steel areas trying to alert scheme members to the dangers, but more needs to be done. Mr Speaker, are you aware of any plans by Ministers to make a statement and outline to the House what the Government are doing to ensure that British Steel pension scheme members are properly protected?

Bercow:

I thank the hon. Gentleman for giving me notice that he wished to raise this matter. I am bound to say that I have not received any indication that a Minister intends to make a statement on this matter in the Chamber. That said, I appreciate that it is a matter of considerable concern to the hon. Gentleman and his constituents. My understanding of that fact is enhanced by the examples that the hon. Gentleman has just furnished to the House. Moreover, it may well be a matter of considerable concern to other Members, too. The hon. Gentleman has succeeded in putting his concern on the record and I trust that it will have been heard on the Treasury Bench. The hon. Gentleman is a person of considerable ingenuity and no little experience in the House, and I rather sense that he will lose no opportunity to air his concerns again in the coming days.
 

 


 

 

R is for regulator

The regulator's response, in part to the British Steel saga, has been to issue a whole raft of new regulatory ideas. 

In particular, The FCA is proposing a rule ensuring advisers' professional PI  insurance policies do not limit claims from the FSCS when a firm become insolvent.

It has also announced that providers will pay 25% towards IFAs' FSCS levies.

S is for St James's Place

In December last year National IFA giant St James's Place (SJP) confirmed that it would no longer be advising on British Steel pension transfers.

It said a day later in a statement that such activity was outside its capacity for risk. 

T is for True Potential

In November last year we reported that national advice firm True Potential had handed out leaflets advertising its final salary transfer service to members of the BSPS.

The marketing and direct approaches by some advisers prompted criticism.

You can view the story here.

V is for Victory

Not all was lost for those steel workers who ended up with poor outcomes. 

A steelworker who was convinced by collapsed IFA Active Wealth (UK) to invest his life savings into an unregulated German property scheme received a full refund. 

New Model Adviser® previously reported that steelworker Mike Pickett had been advised to invest £35,000 of his personal savings into Dolphin Trust GmbH, which specialises in the development of German-listed buildings.

You can read the full story here

W is for Why?

So why did all this happen? 

Enormous DB pension liabilities?

The launch of the pension freedoms?

Mistrust of Tata Steel and the way it was handling workers' futures?

British Steel was probably caused by a combination of all the above. What is scarier, is that - though not identical - similar cases involving huge DB liabilities have emerged since, most notably with the collapse of Carillion earlier this year. 

 

 

X, Y and Z

We'll be honest, we found filling x y and z quite difficult.

Suffice to say that the now EX-advisers involved in the bad advice in this case, may well be asking WHY we have made a big song and dance about it.

The reason is that this is an issue that has kept steelworkers awake at night and advisers themselves facing considerable levels of stress.

Frankly, we'd like everyone to be able to get some decent Zs at night!

Comment & analysis

Twitter