The FCA has published final rules for a redress scheme for former
members of the British Steel Pension Scheme (BSPS) who received
unsuitable advice to transfer out. The FCA expects that over 1000
consumers will receive redress as a result.
Firms will have to review the
advice they gave and pay redress to those who lost money because
of unsuitable advice.
Sheldon Mills, Executive Director for Consumers and Competition
at the FCA, said:
'We have consulted widely on a redress scheme for British Steel
Pension Scheme members. We found that almost half the advice
given to members was unsuitable – an exceptionally high level
compared with other cases. Today we’re confirming the rules
for the redress scheme, so that BSPS members can get the
retirement they worked for.
'We’re working to get the scheme in place quickly to end
uncertainty for members. We will be watching advisers closely and
have put in place checks so that consumers can have confidence
that they’re being treated fairly under the scheme.'
The FCA is providing a tool that firms will have to use to
calculate redress payments. Firms will have to provide details of
all cases rated as 'suitable' to the FCA so it can check if
consumers would like the Financial Ombudsman Service to
independently review their advice.
Consumers should be contacted by their adviser between 28
February 2023 and 28 March, with advice being reviewed by the end
of September 2023. Firms should provide consumers with their
redress calculation by the end of December 2023, if consumers opt
to receive it as a lump sum. If they opt to receive a payment
into their pension they should receive the calculation by
February 2024.
Customers of firms that are no longer trading should make a claim
with the FSCS.
Ahead of the scheme coming into effect, the FCA has also
confirmed its updated rules on
calculating redress payments for unsuitable defined benefit (DB)
pension transfer advice. This will better ensure that redress
puts consumers back in the financial position they would have
been had they remained in their DB scheme, as far as is possible.
Redress is calculated based on the money needed to top up a
personal pension, so the consumer can purchase an annuity at
retirement that provides an income similar to what they would
have received had they stayed in the BSPS. As it now costs
less to buy an annuity, the FCA now expects the average redress
payout in the scheme to be lower than originally estimated, at
£45,000.
The FCA is also proposing to
extend its temporary BSPS asset retention rules so
that the rules apply until firms have resolved all relevant
cases. This will help prevent firms seeking to avoid the cost of
redress liabilities – and reduce the potential burden on the
FSCS.
Notes to editors
-
British Steel Pension redress
scheme
-
PS22/13: Calculating
redress for non-compliant pension transfer advice
-
PS22/14: Consumer redress
scheme for unsuitable advice to transfer out of the British
Steel Pension Scheme
-
CP22/22: Proposed extended
asset retention requirement for firms under the British Steel
Pension Scheme consumer redress scheme
- The scheme will cover most consumers who were advised between
26 May 2016 to 29 March 2018.
