British Steel  

Six key takeaways from MPs’ probe on BSPS scandal

3 Missing steelworkers

Near the end of last year the FCA, along with the Financial Ombudsman Service, the Financial Services Compensation Scheme, and MoneyHelper, travelled to Swansea and Scunthorpe to hold one-to-one sessions with steelworkers to discuss their situations and offer help.

Following these initial visits the City watchdog also travelled to Swansea to meet steelworkers about bringing possible claims against their adviser.

But despite these sessions the FCA admitted to the committee there could still be about 4,000 steelworkers it had not been able to reach regarding the redress scheme or compensation.

Rathi said the relative inertia of steelworkers raising complaints had been surprising.

4 PII adequacy

There were questions raised over whether professional indemnity insurance was adequate in the financial advice market.

A lack of PI insurance and climbing prices for cover have forced a lot of defined benefit advisers out of the market.

Hann pointed out that, as a solicitor, she could not be insured for past business because her regulator - the Solicitors Regulation Authority - would not allow her to practice.

This is not a requirement for advisers’ PII and Hann added the fact most of the weight of the compensation figure will fall onto the shoulders of the FSCS was as a direct result of the minimum terms of insurance being inadequate.

5 Bailey called into question

Committee member Nick Smith, who as the MP for Blaenau Gwent has many steelworkers as his constituents, said there was a missing witness in yesterday’s session - the former chief executive of the FCA Andrew Bailey, who is currently the governor of the Bank of England.

Smith asked the committee whether Bailey would be summoned to give his side of the story.

Another member of the committee told Smith it is believed there has been “a date pencilled in”.

6 Small firms in focus

In the session, Rathi admitted that at the time of the BSPS saga there was an issue with the way firms were supervised.

Rathi said: "Post financial crisis, the FCA focused very heavily on large firms.

"We didn't have individual supervisors watching every single firm - it's not realistic."

But Rathi said the FCA had learned some of the lessons from the BSPS saga and recognised there had been challenges, which have had serious consequences.

When asked if the FCA operates “behind the curve”, Rathi pointed out that the question of determining whether advice is unsuitable or not is a time consuming question.

Mills said the regulator had not been behind the curve because it has taken a particular supervisory approach.