FCA publishes rules for British Steel pension redress
By Josh White
Date: Monday 28 Nov 2022
(Sharecast News) - The Financial Conduct Authority published the final rules for a redress scheme on Monday, for former members of the British Steel Pension Scheme (BSPS) who received unsuitable advice to transfer out.
It said it expected that more than 1000 customers would receive redress as a result.
The City regulator said firms would have to review the advice they gave, and pay redress to those who lost money because of unsuitable advice.
"We have consulted widely on a redress scheme for British Steel Pension Scheme members," said Sheldon Mills, executive director for consumers and competition at the FCS.
"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."
Mills said the FCA was working to get the scheme in place rapidly, 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 said it was providing a tool that firms would be required to use to calculate redress payments.
They would need to provide details of all cases rated as 'suitable' to the FCA, so it could check if consumers would like the Financial Ombudsman Service to independently review their advice.
Consumers would need to be contacted by their adviser between 28 February and 28 March next year, with advice being reviewed by the end of September.
It said firms should provide consumers with their redress calculation by the end of December 2023, if consumers opted to receive it as a lump sum.
If they choose 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," the regulator added in its statement.
"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 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."
The FCA said that as it now costs less to buy an annuity, it now expected the average redress payout in the scheme to be lower than originally estimated, at £45,000.
It also proposed to extend its temporary BSPS asset retention rules, so that the rules apply until firms resolve all relevant cases.
"This will help prevent firms seeking to avoid the cost of redress liabilities - and reduce the potential burden on the FSCS."
Reporting by Josh White for Sharecast.com.
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