It is a pleasure to serve under your chairmanship, Mr Howarth. I pay tribute once again to my hon. Friend Nick Smith for securing the debate and for all the work that he does. He and I have worked on the transfer of steelworker pensions out of BSPS since 2017, which was when all Tata Steel workers were forced to decide whether to move into the BSPS 2 or transfer out into another pension scheme. Given that trust between employees and employer at that point was fragile to say the least, it is not too surprising—completely understandable, in fact—that about 8,000 of the steelworkers decided against joining the BSPS 2. Little did they know that the vultures were circling.
The behaviour of the unscrupulous financial advisers who ripped off these men and their families was completely inexcusable. The sheer size of the pension transfer exercise, the high level of publicity that the transfer received, and the workers’ deep-seated mistrust of the employer at that time, the trustees and Tata made for fertile territory for the parasites. The trade unions, steel MPs and the BSPS trustees all called on the Government to introduce a system of deemed consent regarding the transfer of BSPS 2. I was one of those MPs; I sent a letter to the then Pensions Minister, Mr Gauke. However, we were ignored and those hard-working, honest men were targeted, despite the fact that in only a very small number of cases was transferring out their best option.
These unscrupulous advisers are not stupid; they have behaved in a manner that is cunning, morally bankrupt and in many cases criminal. These events have had a dreadful effect on steelworkers in my constituency and their families. One man transferred £560,000 out on the strength of a 40-minute phone call with an “adviser”, who convinced him that it was what everyone was doing —40 years of service reduced to 40 minutes on the telephone. He believes that he was charged £11,000 to transfer out and for a 40-minute consultation. A man’s entire life plan was ruined by one phone call. Another was advised by one of the local advisers to transfer £348,858 out. He is now paying in excess of £3,500 a year in various costs and charges, as well as exposing himself to the risk of shortfall and dying after his pension pot runs out. That adviser played on the fear that BSPS was going to go into administration. They did not present my constituent with the facts or evidence, but approached the situation from the starting point that he wanted to transfer out, and facilitated that transfer without checking that it was in his best interest to do so.
Who were those unscrupulous financial advisers? The main culprits have been Active Wealth (UK) Ltd and a man named Darren Reynolds, who account for all but a couple of the 77 cases that have so far been taken up with the Financial Services Compensation Scheme. The FSCS has so far paid out £1.8 million to 61 of the 77 claimants, 16 of whom exceeded the £50,000 compensation limit—a limit that has since risen to £85,000. For those who have not been granted compensation, it is purely because they have not suffered a loss, not because they were not badly advised. I think I am right in saying that every single claimant was judged to have been badly advised.
It has been clear for some time that Active Wealth was just the tip of the iceberg. Several other advisers have been acting inappropriately; one did a lot of work in concert with a financial adviser who did not have the required permissions. The transfers were going through in about one hour, and some steelworkers never even met with an adviser. In another part of the country, in west Wales, an adviser had the required permissions, but by the end of 2017 had had their permissions to do pensions transfers revoked. Scores of steelworkers were days away from the transfer cut-off when that adviser circled in. Other advisers saw the writing on the wall and went into voluntary liquidation a few months ago. Those two advisers took their clients with them, literally next door.
Other sales tactics were entirely risible. In one case, steelworkers were turning up at an adviser’s office over the weekend because he had told them that on Monday the pension company would be stopping distribution in the UK. He was literally telling them to hurry up and buy; he spent 30 minutes talking to each steelworker about their pension. It is notable that those financial advisers are finding it easier to simply lock up shop, close their business down and walk away than to face up to what they have done. That, in effect, then limits the redress that steelworkers can receive to £50,000—now up to £85,000—under the Financial Services Compensation Scheme, and from £150,000 under the Financial Ombudsman Service. In effect, we have a deep structural problem in the system, with financial advisers able simply to lock up shop and walk away, rather than give redress to the people they have ripped off. That is a fundamental question for the regulator.
These men were let down not just by rogue financial advisers, but by the authorities: the regulator, namely the Financial Conduct Authority, and the Government. The FCA was far too slow to see the obvious risks and act to protect steelworkers from these vultures. It knew from its investigation in 2017 that more than half of the transfer advice being given was not up to its own standards, but even that, apparently, did not raise any alarm bells or red flags. Most shockingly, certain financial advisers who were under investigation still appeared on the FCA website. The fact that that information was unavailable to the steelworkers feels utterly unjust.
The focus now is to raise awareness among steelworkers who have not spoken up but are due compensation, and to ask them to come forward and seek advice. Something that we have all observed is the role of shame in that. Many steelworkers are deeply embarrassed and ashamed that they have been ripped off. They have found it extremely difficult to share that difficult information with their families and spouses—one of the reasons that more men have not come forward.
I recognise that this is an emotionally sensitive matter for those involved, who may be reluctant to overturn the rock and look at what they might find underneath. However, it is right that we do everything that we can to get justice for these men. Investment companies and self-invested personal pension providers must no longer be able to look the other way and adopt a “see no evil, ask no questions, tell no lies” approach as long as the money continues to roll in. That approach is morally bankrupt.
Since the end of 2017, I have been working with my hon. Friends the Members for Blaenau Gwent and for Gower (Tonia Antoniazzi), lawyers and independent financial advisers in order to bang the drum and get these steelworkers the justice that they deserve. In November, 18 steelworkers came to Westminster to meet the regulators and the FSCS. We were pleased that the FSCS was able to revisit some of those adviser charges. We have also had very welcome promises from the FCA to run seminars in Port Talbot. Tata has also shown a willingness to facilitate meetings with the men—all in the cause of raising awareness. That means that we can at least be optimistic that getting these men some of the justice that they deserve may be possible.
Looking forward, our main focus must be, first, to continue to raise awareness among the steelworkers who may be affected. All firms that gave advice to transfer should verifiably send out a letter written by the FCA, strongly advising them to get the advice looked at and reminding them that they may be entitled to a form of financial top-up if they come forward. We will keep pressing the FSCS and FCA to offer the level of compensation package that the men who have come forward deserve and are due. We will also focus relentlessly on ensuring that unscrupulous advisers are exposed for what they are, and that every bit of insurance that they owe is claimed.
Secondly, we must do all we can to achieve legislative change. We need to ensure that individuals are automatically enrolled in new schemes, not left to be picked off mercilessly by rogue financial advisers in an environment that is characterised by uncertainty. Thirdly, we need to ensure that regulators do their jobs. Why the advisers that I mentioned were allowed to remain on the FCA website while under investigation seriously needs looking into.
Finally, it is worth noting that this issue does not affect steelworkers alone, and that pension mis-selling pay-outs in 2018 hit a whopping £40 million—double the figure for 2017. This is a national issue across many sectors, and it is up to the FCA and the Government to stand up and stick by workers and pensioners who have been wrongly advised, and do all they can to improve regulation and legislation for future generations. I look forward to working with those in this room on all of those challenges, and I thank hon. Members for their attention.