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BSPS redress scheme moves closer to putting 'injustice to bed'

BSPS redress scheme moves closer to putting 'injustice to bed'

Industry bodies and individuals have welcomed the regulator’s redress scheme for British Steel Pension Scheme members, saying it will be a means to get justice for many.

In a consultation paper published today on the consumer redress scheme for BSPS members (March 31), the Financial Conduct Authority said it expects £71.2mn to be paid in compensation to consumers. 

It is expected that the scheme will apply to 343 firms, with advice firms forecasted to incur around £9.1mn in compliance costs to review their historical BSPS transfers.

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Commenting on the paper, MP Nick Smith said it has been “like pulling teeth to get to this point” but welcomed the scheme by the FCA.

“I have been working with steelworkers and campaigners on this for four years now and I know the toll it has taken on so many,” he said. 

“I have been pushing for a redress scheme because I believe this is the best way to put things right for the steelworkers that were targeted by pension sharks.”

Smith said he will be looking at the details of the scheme to see if further improvements are needed and will get a chance to speak with the regulators again at a public accounts committee hearing on April 27.

“This is a positive step forward in putting this injustice to bed. I still want to see those responsible for this scandal suitably punished, not just the rogue advisers but also their introducer accomplices.”

In addition, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said if implemented, these proposals will mean many more people who lost out after transferring out of the BSPS get the compensation they deserve.

“The consultation puts strong emphasis on the number of people yet to make any kind of compensation claim and puts processes in place so their case will be reviewed,” she said.

“Rather than the client having to approach the adviser with a complaint themselves, advisers will need to review affected cases and pay appropriate redress if their advice is found wanting. 

“Firms are expected to identify and prioritise those who may be vulnerable or in need of fast access to redress. This will cover many people who either don’t know they have a claim or have yet to file one.”

In the consultation paper, the FCA said steelworkers generally supported the regulator’s proposals but raised concerns about firms "marking their own homework" by assessing their own advice. 

They believe that firms will be incentivised to assess the advice as suitable, even if it is not. 

Steelworkers wanted as many people as possible to be included in the scheme and raised concerns that, currently, people might be getting inconsistent outcomes or redress amounts. 

In response to concerns that advisers are effectively ‘marking their own homework’, Morrissey said cases where the advice is deemed suitable will need to be checked by a senior individual so there will be safeguards in place.