British Steel Jan 27 2023

FCA extends asset retention rules for BSPS advice firms

Search sponsored by
FCA extends asset retention rules for BSPS advice firms

The Financial Conduct Authority has confirmed the extension of its asset retention rules for firms who advised British Steel Pension Scheme members, as existing temporary rules are due to end on January 31.

In its final rules published today (January 27), the FCA said following consultation, the temporary asset retention rules will be extended so that they continue to apply until firms have resolved all relevant BSPS cases that are subject to the rules of the redress scheme, and other relevant BSPS cases outside the scheme.

The extended rules will apply from 11:59pm on January 31, 2023 and require certain firms who provided transfer advice to BSPS members during the relevant period to preserve their ability to pay their customers’ relevant claims. 

The asset retention rules require in-scope firms to assess whether they are likely to meet their contingent BSPS redress liabilities on an ongoing basis. 

In-scope firms are required to complete a prescribed Financial Resilience Assessment (FRA), and firms that have not previously completed an FRA (ie, firms that arranged three or four BSPS transactions) have to report the outcome to the FCA by February 28, 2023. 

“Where the FRA suggests that a firm may not have sufficient assets to meet estimated contingent BSPS liabilities, the asset restriction rules will prevent it from undertaking transactions that are not ‘in the ordinary course of business’,” the regulator said. 

“Firms subject to the asset restriction rules would be able to continue carrying on their ordinary business but be unable to carry out other transactions that might reduce the assets that they have to meet potential redress liabilities.”

As part of the rules, firms which arranged fewer than three BSPS transfers will be excluded.

The regulator said this is to ensure that its intervention remains proportionate, considering the impact on both firms and the FCA, and is appropriately focused on those firms where there is a greater risk of customer harm - those firms which arranged a higher number of BSPS transfers. 

“We also consider that it is appropriate to exclude firms that are natural persons (ie, sole traders) or unlimited partnerships involving one or more natural persons,” it said. 

“This is because there is no clear legal division between the personal and business assets of such firms, so we do not consider it appropriate to impose an asset restriction on these types of firm.”

Dear CEO letter

Alongside the final rules, the regulator also sent a Dear CEO letter to pension providers and any other firm that administers or manages the proceeds of BSPS transfers. 

This is to ensure these third-party firms are aware of their obligations.