FCA set to prepare advice redress scheme for British Steel transfers

The watchdog expects to consult on the move by the end of March 2022

Tom Ellis
clock • 1 min read
FCA set to prepare advice redress scheme for British Steel transfers

The FCA will prepare a redress scheme for former British Steel Pension Scheme (BSPS) members once its board approves the consultation documents.

The FCA has set out its expectations, through one of its 'Dear CEO' letters, that financial advice firms in the scope of a potential redress scheme should retain assets and adequate financial resources, and should not try to avoid their responsibilities.

The redress scheme will be limited to BSPS transfer advice given between 1 March 2017 and 31 March 2018, which the regulator said was a "highly exceptional case". The FCA said its analysis indicated significantly more unsuitable advice (almost half at 47%) than observed in reviews of higher-risk firms in non-BSPS cases (around one-fifth at 17%).

Under the redress scheme, firms that advised on British Steel transfers would be required to review their advice. If the advice was unsuitable and resulted in financial loss for former British Steel members, those firms will be required to provide compensation, the FCA said.

If approved by the watchdog's board, the FCA should consult by the end of March 2022 once it has gathered further evidence and engaged with stakeholders.

The regulator warned it will take action it deems necessary against firms that attempt to avoid redress liabilities: "Being unable to compensate consumers and transferring these costs to other market participants via the Financial Services Compensation Scheme levy is unfair and places an unnecessary burden on other firms. Where we see firms attempt to do this, we will take action to stop it."

It also said firms should continue to undertake existing past business reviews and engage in ongoing enforcement investigations or supervisory work connected to British Steel.

 

Tom Ellis
Author spotlight

Tom Ellis

Professional Adviser journalist from 2016-2022

More on Law and Regulation

Aon says reforms will lead to more gradual change

Solvency II reforms will not lead to substantial step change in insurer pricing

Reform will support higher bulk annuity volumes without price rises

Jonathan Stapleton
clock 25 November 2022 • 1 min read
Griffith: "We are of the view that the existing provisions in the bill are currently sufficient"

Ministerial backdown over intervention powers positive for pensions

Change in policy will ensure that regulators retain their independence from government

Jonathan Stapleton
clock 24 November 2022 • 1 min read
The trial will take place at Preston Crown Court on 20 November 2023

Former trustee pleads not guilty in TPR prosecution

David Broadman pleaded not guilty to six counts of making illegal pension investments

Holly Roach
clock 24 November 2022 • 1 min read
Trustpilot