The Financial Conduct Authority has said firms should provide British Steel pension scheme members with their redress calculation by the end of December 2023, if individuals opt to receive it as a lump sum.
In its final rules for a redress scheme for BSPS members who received unsuitable advice, published today (November 28), the FCA said consumers should be contacted by their adviser between February 28, and March 28, 2023, with advice being reviewed by the end of September 2023.
Those opting to receive redress as a payment into their pension should receive their calculation by February 2024.
In a press briefing this morning, Therese Chambers, director of consumer investments at the FCA, said: “The period for the suitability review of files is between February and September next year.
“These are rules that we are making in the consumer redress scheme so they are enforceable as any other rules in our handbook are. We will be keeping a very close eye on firms as they go through this process.
“If they do not abide by our rules, then we will be holding them to account using our usual supervisory and enforcement tools. “
The City watchdog said it is providing a tool that firms will have to use to calculate redress payments.
Firms will have to provide details of all cases rated as 'suitable' to the FCA so it can check if consumers would like the Financial Ombudsman Service to independently review their advice.
It expects more than 1,000 consumers will receive redress as a result and reiterated that customers of firms that are no longer trading should make a claim with the FSCS.
Sheldon Mills, executive director for consumers and competition at the FCA, said: “Today we’re confirming the rules for the redress scheme, so that BSPS members can get the retirement they worked for.
'We’re working to get the scheme in place quickly 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.”
Ahead of the scheme coming into effect, the FCA also confirmed its updated rules on calculating redress payments for unsuitable defined benefit pension transfer advice.
The regulator said this will better ensure that redress puts consumers back in the financial position they would have been had they remained in their DB scheme.
The FCA first set out plans to deliver £71.2mn in compensation to former members of the BSPS who received unsuitable advice to transfer out of their pension.
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.
As it now costs less to buy an annuity, the FCA said it expects the average redress payout in the scheme to be lower than originally estimated, at £45,000.