The British Steel pension transfer debacle scarred the reputation of IFAs, but has slid off the front pages with higher interest rates reducing pay outs. It is worth revisiting. Data lies in the 2021 accounts, when this all started. £23m was reserved for claims by Quilter, A search on AI says that £16m was paid out, and £12m claimed from PI insurance.
So in the end we all pay, via higher insurance premiums. You see? We are all one happy family really, and despite you having no history of claims, you suffer from Quilter trouble because the PI pool for IFAs is very narrow.
There is another reason for optimism in the face of disaster. The Quilter share price crashed when it disclosed that it was liable for £23m of compensation based on the British Steel activities of Lighthouse Group, a firm that it had taken over. But in the end the costs to the business was a fraction of that. In their 2023 annual report Quilter disclosed a liability of £6m against British Steel transfers. These mostly came from Lighthouse PLC, a network that they purchased some years before. So what exactly was paid out? In their accounts to the year ending 2024, they disclosed that during 2023 they paid £1m in compensation, and £2m in associated costs. In the 2024 year, they paid £1m compensation, and £1m costs. Then some £3m was reversed back into the profit and loss accounts. So, to be clear, at a cost of £3m, they paid out £2m in pension compensation!
The final cost for the firm was about £7m. That is about one per cent of their revenue.