An MP has written to the Financial Conduct Authority about its proposed redress scheme for British Steel Pension Scheme members, calling for a ‘legal test’ to extend the time period it applies to.
The letter, written by MP Nick Smith and supported by 27 cross-party MPs, provides feedback on plans to compensate steelworkers targeted by rogue advisers in 2017.
In March, the FCA set out plans to deliver £71.2mn in compensation to former members of the BSPS who received unsuitable advice to transfer out of their pension.
Smith said: “This is an important moment for steelworker pensioners, the FCA proposal on a redress scheme will be a life-changing decision for many. I’m pleased so many members of Parliament from steelmaking areas recognise the importance of this scheme being introduced.
“This thing has already taken too long, the FCA needs to crack on to ensure fairness for steelworkers.”
In the letter to the FCA, Smith outlined the views the MPs had on the scheme and asked the regulator to view this as a response to the consultation.
MPs agreed with the FCA’s assessment that unsuitable advice was widespread throughout this period, and as a result they were likely to have suffered losses.
Smith said the MPs “strongly support” the scheme being opt-out so it can reach more people.
However, MPs raised concerns that not all those who could reasonably expect compensation will end up doing so if the redress scheme only captures March 1, 2017 to March 29, 2018.
It urged the FCA to include as many consumers as possible within the redress scheme, and “strongly hope that the legal test will be met” to allow the extension to May 26, 2016.
“We believe there is already very strong evidence, as detailed both in the consultation paper and the National Audit Office report, that steelworkers lost tens of thousands of pounds,” he said.
“For these reasons, we believe the legal test for a section 404 redress scheme has been met. We are also pleased that the FCA’s proposal has the greatest number of consumers in scope and largest number who will receive redress out of the options they considered. This should also deliver the most compensation to steelworkers, which we welcome.”
Smith added: “This is particularly important given some of these consumers will already now be timed out from the six-year rule for making a complaint to the appropriate regulator.”
He explained that the defined benefit advice assessment tool seems appropriate for assessing the suitability of advice and MPs support the use of an FCA tool to avoid financial advisers "marking their own homework".
“We strongly agree too that firms in the scheme should be required to pass consumer details to the FCA so steps can be taken to appropriately refer them, which will allow for a simpler and more straight-forward process for those affected to receive the appropriate compensation.”
He said where firms do not abide by the rules of this scheme, the FCA should take enforcement action.