British Steel Apr 12 2023

BSPS redress scheme legal challenge dropped

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BSPS redress scheme legal challenge dropped
The BSPS redress scheme came into force in February this year.

The Financial Conduct Authority has welcomed the withdrawal of a legal challenge against its decision to set up a redress scheme.

The legal challenge was withdrawn by the British Steel Action Group against the FCA's decision to set up a redress scheme for former British Steel Pension Scheme (BSPS) members.

In a statement, the FCA said: “Our view all along has been that the challenge was without merit and that we would vigorously defend the scheme. 

“This challenge has, in our view, been pursued unreasonably with little intention to go to trial so we are also pleased BSAG has agreed to make a substantial contribution to our costs."

FS Legal represents the British Steel Action Group, which is made up of advice firms facing redress bills for DB transfer advice.

FS Legal first called for the consultation on the scheme to be re-opened in November last year, because of what it said was a fundamental change of circumstances since the scheme closed.

The group argued that because of the steep rise in the interest base rate, which rose from 1.25 per cent when the consultation closed in June to 3 per cent in November 2022, a re-consultation was needed to factor in the impact of this. 

This was because the value of DB pensions are calculated using the price of bonds - which experienced a crash last year. 

The FCA also noted how it has publicly warned and taken action against certain BSAG member firms for making unsolicited offers to former BSPS members. 

In February, the regulator said it had identified 15 firms - most of which it said were affiliated with BSAG - who engaged in the misconduct.

The redress scheme entered into force at the end of February this year. 

Under it, former BSPS members who have not complained are able to access redress.

Firms will have to review the advice they gave and pay redress to those who lost money because of unsuitable advice. 

It is estimated that 1,400 steelworkers will receive £71.2mn in redress under the scheme. 

FTAdviser has approached FS Legal for comment. 

jane.matthews@ft.com