British Steel  

Advisers question FCA data amid warning 343 firms face insolvency

'The obfuscation is evident throughout'

Many of the letters, including submissions from AEON Financial Services, Burley Financial Services and Belmayne Independent Financial Services, stated that there were discrepancies between the FCA’s data when referring to the unsuitable advice.

In Belmayne’s letter, it said: “We have asked independent experts to consider disputed files using the DBAAT tool, and they have told us the files seem fine. 

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“When we analyse the files ourselves with DBAAT, we get a much lower unsuitable grading compared to the FCA.”

Another anonymous letter said the FCA’s DBAAT is a basic “Excel categorisation-prediction black box”.  

“Data is keyed into it, a result emerges from it, but it is impossible for anyone other than the FCA to see how it operates,” it said. “Formulae, coefficients, and parameters are hidden to users.  

“The results it delivers depend considerably on what was keyed into it. If policy or guidelines, or group members change, the long-term results drift.”

Members of the British Steel Adviser Group have asked the FCA for detailed technical, method, and policy-related questions and said it has received very little information back. 

“FOI and other requests on aspects of DBAAT and related FCA decisions are being routinely slow-walked,” it said. 

“We simply do not know how the FCA arrived at their decisions, and they have refused to satisfactorily explain them.”

The FCA’s redress consultation outlines that 46 per cent of the advice to transfer was considered unsuitable, based on the output of the DBAAT.

The letter said there was “obfuscation” throughout the consultation with the FCA’s data.

Advisers argued that the FCA-appointed statistician’s analysis on this is, on first look, perhaps unorthodox.

“The statistician’s report notes that of 365 files assessed, 145 files were considered unsuitable,” a letter said. “Basic maths would therefore suggest a potential unsuitability rate of 39.7 per cent. 

“However, it is explained in the ‘Technical Appendix’ to the statistician’s analysis that this figure has been ‘grossed up’ due to the probability of data available, with the figure of 46 per cent arrived at based on probability.

“Most surprisingly, this is not explained clearly elsewhere in the consultation. Indeed, the FCA ultimately concluded that around 50 per cent of advice was unsuitable, although beyond being within the ‘confidence interval’ from sampled cases, it does not explain in detail why the regulator arrived at this figure.”

An FCA spokesperson said: "We are consulting on the proposals for the scheme until 30 June and welcome views from stakeholders.”