* Pension compensation claims on the rise - FSCS
* Claims reflect bad advice on transferring pensions
By Huw Jones
LONDON, May 1 (Reuters) - Firms advising people on transferring pension schemes will have to pay a higher levy to Britain’s statutory compensation body to help meet claims from steelworkers.
The Financial Services Compensation Scheme (FSCS) said it will levy financial firms 407 million pounds ($559.63 million) overall in the financial year that began last month, up 71 million pounds on the prior period.
The FSCS can pay compensation if a firm is unable to pay claims against it.
The component levied on life and pensions advisers has been increased by 52 million pounds, mainly due to the rise in defined benefit pension transfer claims, the FSCS said in a statement on its final levy on Tuesday.
This includes 10 million pounds to pay claims against a number of independent financial advisers, including Active Wealth, which advised workers at former British Steel plants to transfer their defined benefit pension into another scheme.
Britain’s Financial Conduct Authority was heavily criticised by lawmakers in February for being too slow to prevent “vulture” financial advisers from ripping off steelworkers faced with critical decisions over their 14 billion pound pension pot.
Britain has also introduced pension “freedoms” which allow people to cash in their pension pots.
The FSCS said there will be a higher levy to pay claims against operators of Self-Invested Personal Pensions or SIPPs.
The increased budget will also help pay for claims expected against Beaufort Securities, an insolvent UK broker, the FSCS said.
“The levies announced today provide for the steady increase in claims and compensation costs related to retirement saving,” said Mark Neale, chief executive of the FSCS.
“Many claims reflect bad advice to transfer pension savings from occupational schemes into Self-Invested Personal Pensions, usually with a view to invest in illiquid and risky unregulated products,” Neale said. ($1 = 0.7273 pounds) (Reporting by Huw Jones, editing by Louise Heavens)