The Financial Conduct Authority has identified more firms that it believes are making unsolicited offers to former British Steel pension scheme (BSPS) members who have not made complaints.
In an update last month (January 26), the FCA said it was aware of four firms who are associated with the British Steel Action Group (BSAG) that may be engaged in this conduct.
However, today (February 7), the regulator said it has identified 15 firms who are engaged in the misconduct - most of which it said are associated with BSAG.
“On January 25 we set out concerns about an emerging practice where some firms were making unsolicited offers to former BSPS members, ahead of the redress scheme which begins on February 28,” it said.
“We are concerned that this [misconduct] is a deliberate attempt to exclude former BSPS members from the scheme, binding them to receiving less money than they might be entitled to under the scheme.”
The City watchdog said this type of behaviour will not be tolerated and it will take firm action to put a stop to this “sharp practice”.
In March, the FCA introduced a redress scheme for former BSPS members who have not complained.
Under the scheme firms will have to review the advice they gave and pay redress to those who lost money because of unsuitable advice.
It estimated that 1,400 steelworkers will receive £71.2mn in redress under the scheme.
The regulator said some firms have told consumers that their redress would amount to zero if it is calculated in accordance with FCA guidance.
However, a spokesperson for BSAG said it has, through its lawyers, raised with the FCA issues around settling claims prior to the commencement of the proposed BSPS redress scheme.
The spokesperson said:
- The FCA have confirmed that there is no prohibition on settling claims. If there were, the firms would not make settlement offers.
- BSAG is not aware of any firm who has not utilised specialist actuarial support to calculate whether any redress is payable.
- Every firm has been repeatedly told to ensure any offer is fair and in line with the PS22/13 calculation changes. Offers have currently only been made to existing clients of firms, who after a barrage of FCA invitations to complain, still remain loyal to the firms.
- Firms with Fos matters have routinely made offers in settlement and have done so without being accused of “misleading”.
They added: “The vast majority of BSPS matters involve no redress. This is because funds held by BSPS transferees are more than sufficient to buy an annuity (to replace the benefits of the scheme).
“We invited the FCA to give some examples and to date they have not done so, choosing emotive press releases instead. "
Expectations for firms
In the regulator's previous update, the FCA said it expects firms to treat customers fairly and to clearly explain the implications of accepting an offer before the scheme starts.
If a former BSPS member has made a complaint to a firm and the firm decides that the advice was unsuitable, the firm should inform them that the redress methodology will change on April 1, 2023 and that they have the option to wait until then before the redress calculation is carried out.
Accepting an offer now might mean former members are not included in the scheme and might mean they do not receive the right amount of redress, the regulator explained.
sonia.rach@ft.com
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