Nick Smith has vowed to continue his fight for a redress scheme for former members of the British Steel Pension Scheme as he warned time was running out for steelworkers to bring their claims.
Speaking to FTAdviser, the MP for Blaenau Gwent who has been campaigning on the steelworkers' behalf, said he is “not letting go” of the idea of a BSPS redress scheme, adding he understands the City watchdog has “left the door open” to do this.
Smith said: “[The Financial Conduct Authority] have talked about it being considered and it may take three to six months still. This is their latest position. So, we definitely want to pursue this further.”
A consumer redress scheme, such as the one set up for Arch Cru victims in 2012, would compensate steelworkers for the unsuitable advice they received to transfer out of their pension scheme.
It would establish a simpler process for those wishing to claim, with the FCA deciding the scope and timing of the scheme.
The FCA's board said at a meeting in July discussions were held around the available options for securing redress for scheme members. But it concluded it did not have sufficient information to make a decision on a broad brush redress scheme at the time.
Earlier this month, the FCA told FTAdviser “whether or not we undertake a redress scheme is under review and analysis”.
Smith wrote to the regulator back in August asking about the FCA’s powers under the Financial Services and Marketing Act 2000, particularly section 404 which allows it to implement a consumer redress scheme.
Sheldon Mills, executive director of consumers and competition at the FCA, responded the same month explaining there were three key tests which must be met before this power can be used.
Firstly, the FCA must see that there may have been a widespread or regular failure by relevant firms.
Then, as a result of this failure, consumers have suffered a loss and if they brought legal proceedings a remedy or relief would be available.
And lastly, the FCA has to consider that it is desirable to make rules for the purpose of securing such a redress scheme.
In the letter, Mills said creating such a redress scheme would be a "significant intervention in a market" and could have "far reaching consequences".
Mills said: “We must rigorously assess whether the legal test for using this power would be met in any particular case. We do not yet consider that we have sufficient evidence to determine widespread or regular failure in this case so we are undertaking further file reviews.
“The results of these reviews will be considered alongside the evidence that we have already collated from a number of internal and external sources, including intelligence obtained from discussions with members and data from the Financial Ombudsman Service and the Financial Services Compensation Scheme.”
He added: “Once we have reached a robust position in relation to the first two conditions, under the third test we are required to make an objective, evidence-based judgement on the overall appropriateness of a consumer redress scheme as a remedial tool.