The Financial Conduct Authority has extended the deadline for responses on its consultation looking at how it could change the way it calculates redress for those who were wrongly advised to transfer out of a defined benefit scheme.
The deadline for responses from the industry was September 20, the day after the Queen’s state funeral - which will be a UK bank holiday.
Adviser at Echelon Wealthcare, Alastair Rush, emailed the FCA yesterday (September 12) asking for the regulator’s thoughts on delaying the deadline by “a couple of weeks”.
Replying to Rush, a spokesperson at the regulator said: “I can confirm we will be extending the deadline for the consultation to September 27.
“The relevant documents and website will be updated shortly with the new date and we are letting key and interested stakeholders aware of this important change.”
In an email to FTAdviser, the regulator confirmed the week-long extension, however at the time of writing the relevant page on the FCA's website still states September 20, 2022.
As it stands, the methodology for calculating payouts works on quarterly market assumptions.
Two-year gilt yields have been rising and when gilt yields rise, compensation for defined benefit pension transfers can fall.
One of the proposals is to move from quarterly to monthly market assumptions, which could help reduce potential dips in redress due to market volatility.
A large group who have suffered financial loss from transferring out of a defined benefit to a defined contribution pension scheme following non-compliant advice are British Steel workers.
Last month, FTAdviser learnt that payouts from the Financial Services Compensation Scheme to these steelworkers had fallen by around £30,000 this year as a result of challenging market conditions.
This was based on the average FSCS payout paid to steelworkers represented by one firm falling from £72,000 in the first quarter of 2022 to £40,000 since July 1.
Another suggestion has been to base redress calculations on an old date, rather than a current one subject to fresh volatility.
The British Steel Action Group, which represents advice firms facing redress bills for DB transfer advice, has argued “any attempt to justify assumption metrics from an old date to increase redress today is a fallacy”.
The FCA intends to publish a reviewed copy of the methodology sometime this winter, but an exact date has not been set.