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.