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FCA contacts advisers about BSPS advice

FCA contacts advisers about BSPS advice

The Financial Conduct Authority has sent a questionnaire to advisers asking for details about defined benefit transfer advice given to British Steel members, as it readies to prepare a redress scheme.

The questionnaire, seen by FTAdviser, is part of the FCA's preparation and further analysis of advice given to members of BSPS ahead of its creation of a redress scheme.

It reads: "In December 2021 we announced that the Board of the FCA had asked for a consultation to be prepared on a redress scheme for former members of the British Steel Pension Scheme (BSPS) who transferred out of the scheme. As part of our preparation we are undertaking further analysis of advice given to members of the BSPS between 29 March 2016 and 31 March 2018.

"All firms who have received this email should complete the questionnaire, whether you have advised on the British Steel Pension Scheme or not."

If a firm says it did not provide advice the questionnaire ends and simply requires firms to confirm the answers given are true and sign the form. If a firm says it did, it needs to answer further questions.

The FCA said the form was sent to about 2,500 advice firms.

"We are also asking for details of any complaints firms have received relating to BSPS transfer advice they have given and whether firms have PII that covers any BSPS transfer advice," a spokesperson said.

The form must be submitted by February 10, 2022.

The City watchdog announced in December that it was consulting on a redress scheme which would be limited to BSPS transfer advice given between March 1, 2017 and March 31, 2018, and would ask firms to review their advice and, if found unsuitable, provide compensation. 

This came after a number of calls from the industry and MPs for the regulator to launch a redress scheme, which would compensate steelworkers for the unsuitable advice they received to transfer out of their pension 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. 

But the FCA later said it was considering a scheme after all.

In October, the National Audit Office announced it would investigate the FCA’s work on BSPS, which is scheduled for Spring 2022.

A month later, the NAO began contacting advisers and other stakeholders to better understand what happened as part of the British Steel Pension Scheme debacle to inform its probe.

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.