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FCA says BSPS redress scheme under review

FCA says BSPS redress scheme under review

The Financial Conduct Authority has said it is reviewing whether it produces a redress scheme for members of the British Steel Pension Scheme.

Sheldon Mills, executive director, consumers and competition at the FCA, told FTAdviser that “whether or not we undertake a redress scheme is under review and analysis”.

Mills added that the regulator has to analyse and see “whether or not a legal test for a redress scheme are met”.

It comes after board meetings for 21 and 22 July, published earlier this month (September 7), showed discussions were held around the available options for securing redress for British Steel scheme members.

One option could be to implement a consumer redress scheme, akin to the one set up for Arch Cru victims in 2012, which compensated investors for unsuitable advice to invest in those funds.

The FCA board decided against this for the time being saying it didn't have "sufficient information" but the matter is still under review.

Despite this, the board said it “supported enhanced engagement activities” with BSPS members while file reviews were conducted to establish a more detailed evidence base on which to make future decisions.

Earlier this week the regulator was in Swansea holding one-to-one sessions for those who transferred out of BSPS.

The FCA was also joined by the Financial Ombudsman Service, the Financial Services Compensation Scheme, and MoneyHelper.

Latest figures from the FSCS showed it has paid out £21.5m in total so far to members of BSPS who were wrongly advised to transfer their defined benefit pensions.

The lifeboat scheme told FTAdviser that 482 is the total number of decisions made, including decision rejecting the claim, with an uphold rate of 88 per cent.

The average compensation has been £50,000 but the overall compensation amount could be set to grow significantly as the FSCS still has 135 claims in progress.

The BSPS case

Three years ago British Steel Pension Scheme members were asked to decide whether to move their DB pension to a new plan, BSPS2, or stay in the existing fund, which was then moved to the PPF as part of a restructuring of pension liabilities, or to transfer out altogether.

As a result about 8,000 members transferred out of the old scheme, with transfers collectively worth about £2.8bn.

But concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA that resulted in a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.

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