Tip off money paid in return for names, security guards throwing sharply dressed advisers out of the local shopping centre, and large sums being siphoned out of steelworkers’ pension pots: such subjects are the talk of the town in Port Talbot.
The south Wales town has been inundated with financial advisers touting for business since Tata Steel, which owns the giant steelworks in Port Talbot, decided last year to restructure its historic final salary pension scheme.
The British Steel pension scheme (BSPS) is one of the biggest in the UK, with 130,000 members and a staggering £15bn of assets. Tata is closing the scheme in order to pave the way for a merger of its European steel operations with ThyssenKrupp, a German rival.
Members were told they could either take their life savings in a lump sum and invest it in personal plans; move it into a new Tata pension scheme, with fewer benefits; or default into the Pension Protection Fund, the government’s lifeboat scheme for failed companies.
This week it has emerged that about 25,000 members failed to respond by the deadline and they will default into the PPF; about 83,000 decided to join the new scheme, backed by Tata.
Many thousands, however, decided to withdraw huge sums – averaging between £300,000 and £700,000, depending on length of service – to invest in personal plans.
That sparked a “feeding frenzy” and resulted in workers being targeted by rogue financial advisers, who have been accused of charging large fees and pushing some towards unsuitable, risky investments that have already lost tens of thousands of pounds.
Alan Coombs, a Community union shop steward at the Port Talbot site, said some advisers were well known, trusted firms. However, others were unknown and deployed aggressive tactics to win new business leads, such as offering payment for referrals.
“I know of a few people who were recommending other guys [steelworkers] and they were being paid for it,” he said. “There are ex-workers that have done it and been paid for recommending contacts at the steelworks.”
The large sums being paid to steelworkers was like blood in the water and attracted financial advisers from around the country to south Wales.
Coombs reckons that he and his colleagues were being constantly harassed, with unsolicited phone calls from firms on an almost daily basis.
“It was really all the time, a few times a week, asking, “what are you doing with your pension? Can I come and meet you to talk?” he said.
“I told people to stay away from those that were touting for business. They would turn up on the doorstep – a few were trying to get into work to talk to us. But mostly they were arranging meetings in a local hotel or rugby club and inviting everyone along.”
Taibach Rugby Club, close to Port Talbot town centre, was one such venue booked out by firms pitching for pension business.
But the tactics have not gone down well with the denizens of Port Talbot.
A buzz of chatter fills Bro’s Cafe, located on an industrial estate in the shadow of the steelworks, as locals and groups of workmen in orange overalls tuck into the all day breakfast.
Bobby Griffiths, a 66-year-old retired steelworker, is deep in conversation with a friend in the corner of the cafe.
“It’s a phenomenal amount of money,” he said. “Some of these boys are taking a huge risk. It’s very frightening, but we live in a rip off age. This money has got to last them and they are not going to get this chance again.”
This cynical targeting of newly flush steelworkers has also sparked a ruckus in the corridors of power.
The work and pensions select committee has criticised the Financial Conduct Authority (FCA), Britain’s financial watchdog, saying it could be “sleepwalking into another huge mis-selling scandal” over British Steel pensions.
Frank Field, chairman of the Westminster committee, said the practice had become a “feeding frenzy” and a “honeypot for scammers”.
The FCA is probing the concerns and South Wales police is also investigating allegations that steelworkers were victims of pension fraud.
The police probe was launched after the financial watchdog revealed that its inquiries had discovered that a third of BSPS members had been given bad advice on transferring their pensions.
The FCA has contacted 109 financial firms about the BSPS – and 21 of them have been asked to provide case files so the regulator can assess the suitability of the advice given. Eight financial advice firms have already accepted voluntary restrictions on their permission to provide pensions advice following intervention by the FCA.
Michael Cosker, owner of the Rolls Choice cafe in the Aberafan Shopping Centre and former chairman of the Port Talbot Chamber of Commerce, said two men [financial advisers] came into his cafe touting for business at the end of last year.
“I had two in here from Bristol, asking me if I knew any steelworkers who come in,” he said. “But, the [shopping] centre was on it straight away – the head of security asked me what they wanted, so I told him.
“They must have been spotted on the cameras and looked suspicious because they were approaching people in the shopping centre. They were escorted out of the centre by the security guards.”
Cosker believes any firm found to have misled workers about their pension should be prosecuted and banned from practising again.
“A lot of these boys know nothing about financial services,” he said. “If you ask them how to make steel, or to repair a machine they will tell you. If some weasel has come down here and taken money off them – I hope they get what they deserve. This world is full of shysters; let’s hope they get brought to justice.”
Malcolm Davies takes shelter from the drizzle by slipping into the Lord Caradoc pub on Port Talbot high street for a quiet lunchtime pint. The 76-year-old has a personal reason to hope the authorities take swift action to stamp out any unethical behaviour.
“My son works there. He has been affected, but he hasn’t told me all of it,” he said. “The only thing he said is, ‘Dad, it’s too deep for me to explain to you’. He’s been at the ‘works for about 19 years. I think it may be in the hands of a solicitor.”
For Coombs, he believes his life savings are safe after withdrawing his pension pot and taking advice from a reputable firm in Cardiff.
But he has close friends who have not been so lucky. Those friends declined to be interviewed by the Guardian. Coombs explained that the anger felt initially by some workers has now turned to embarrassment.
“People tend to listen to experts, particularly when a lot of them have the right letters after their name and they are saying what you want to hear,” he said.
“In 10 or 15 years there are going to be people thinking ‘where has it gone? This isn’t what I was promised’.”