Tim Fassam, director of government relations and policy at PIMFA, made plea when giving evidence to MPs of the Public Accounts Committee yesterday.

The committee has been interviewing regulators, trade bodies and legal firms for their thoughts on the British Steel Pension Scheme (BSPS) scandal.

Mr Fassam said: “Where there has been egregious behaviour from a financial adviser, that advisory firms should be paying the compensation. Where they are out of business there are processes in place to deal with the via the FSCS, but we think there certainly is a case to consider about whether there should be a broader Treasury run compensation framework along the lines that they introduced for our LCF where there was a view that there was a regulatory failure as well as a failure of behaviour.”

He added that a Treasury-run compensation scheme would be most appropriate for scheme members who do not easily fit into the existing compensation framework.

According to the Financial Conduct Authority (FCA), around 4,000 former BSPS members that the regulator has had no contact with, 75% of whom have not complained to any regulatory bodies.

In 2017, many British Steel workers were advised to transfer out of their defined benefit pension into a defined contribution pension, typically a personal pension or a Self-Invested Personal Pension (SIPP). The scandal has attracted national attention and criticism. The FCA recently said that it was looking at 343 advice firms involved in BSPS claims and was expecting to pay out over £70m in compensation.

By transferring to a private pension arrangement, the BSPS victims would have potentially lost benefits already built up in the British Steel Pension Scheme.