The Financial Services Compensation Scheme has declared a pension advice firm in default.
MLM Wealth Management Limited, trading as MLM Financial Services, was declared in default last week (September 2).
The FSCS said it currently has two claims against it for pension transfer advice.
The two claims it has received to date are British Steel Pension Scheme related.
Both claims are in progress.
Last month (August 14), a separate advice firm associated with the British Steel Pension Scheme (BSPS) failed after the FSCS received five claims.
The BSPS case
During 2017, BSPS members were asked to make decisions about their pensions as part of a restructure of the scheme.
About 8,000 members transferred out of the scheme, with transfers collectively worth about £2.8bn.
But concerns about the suitability of the transfers were soon raised, leading to an intervention from the Financial Conduct Authority that resulted in a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.
The debacle created a mountain of liabilities, which lawyers believe could end up costing the industry up to £300mn.
The FCA announced last year that it plans to deliver £71.2mn in compensation to former members of the scheme who received unsuitable advice.
The scheme covers those who transferred out between May 26, 2016 and March 29, 2018.
However, in February this year a number of steelworkers wrote to the FCA expressing concerns about the regulator’s calculations for the scheme.
FSCS payouts
In July, the Financial Services Compensation Scheme revealed it had paid out total compensation of £403mn this financial year, lower than the total for 2021/22 (£584mn).
In its annual report and accounts, published July 18, the FSCS said the main drivers for compensation included firm failures within the life distribution & investment intermediation (LDII), general insurance provision and the investment provision classes.
In the LDII class - which advice firms fall under - the compensation paid in 2022/23 was £203mn, lower than in the previous financial year (£263mn).
The decrease was down to a reduction (£33mn) in compensation costs as it processed fewer complex pension claims.
sonia.rach@ft.com
