A number of steelworkers have written to Financial Conduct Authority boss Nikhil Rathi expressing concerns about the regulator’s calculations for the BSPS redress scheme.
In March, the FCA introduced a redress scheme for former BSPS members who have not complained.
Under the scheme firms will have to review the advice they gave and pay redress to those who lost money because of unsuitable advice.
It estimated that 1,400 steelworkers will receive £71.2mn in redress under the scheme.
However a number of steelworkers have written to Rathi expressing concern about the amount they have been compensated, compared to a colleague in the same scenario.
In an email seen by FTAdviser, one steelworker said: “I believe the amount awarded is nowhere near to compensating me. How can I be different to people working alongside me with the same scenario of getting full compensation?
“It has caused me very much stress, anxiety and depression resulting in a nervous breakdown in 2021.
“I served my country for 8 years including active service and 31 years in the steel works only to be done over and that's putting it politely by the FSCS by poor compensation.”
In another email, a steelworker said the way the FCA has handled the whole process of people who have transferred out of BSPS “has been very poor” and had a massive impact on their mental health.
The individual, who at the time of transferring, was 35 years old, said: “We had a very short deadline with no time to think things through when our pensions were at high risk.
“I feel this could have all been avoided if the FCA had reacted swiftly at times."
It took this specific steelworker over 10 months for the claim to be viewed and finalised and when it was, it was described as a “shocking” difference between payouts from February 2022 compared with August 2022.
“I have been completely penalised by the length of delays by FSCS/FCA to view my claim and my pay-out is less than half of my colleague of the same age, service and circumstances,” they wrote.
There have been a number of steelworkers who have written to the FCA boss along the same lines, stating that their compensation has been very low when compared to colleagues who were paid out earlier.
“It’s due to market conditions the date it’s calculated, I find this incredulous and very frustrating,” one said. “The calculation should be from the date I was transferred surely.”
BSPS case
During 2017, BSPS members were asked to make decisions about their pensions as part of a restructure of the scheme.
About 8,000 members transferred out of the scheme, with transfers collectively worth about £2.8bn.
But concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA that resulted in a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.
The debacle created a mountain of liabilities, which lawyers believe could end up costing the industry up to £300mn.
Speaking to FTAdviser, Echelon Wealthcare principal Al Rush said Tim Archer, the ombudsman director, said that while the delays in handling compensation claims are “regrettable”, the delays are irrelevant because the compensation calculated on the day is appropriate.
Rush said: “It is facile and spurious to say that a 45-year-old who gets no compensation on the Monday is correctly compensated, and that a 45-year-old who gets compensated on the Tuesday is also correctly compensated if he gets £20,000. Both cannot be right."
Rush added: “It took until November of last year, after maulings by the public accounts committee and the National Audit Office, for the FCA to finally put its hands up and say, 'okay, we will do a redress scheme'.
“The issue though, is that as a consequence of its prevarication and delay, the compensation now being awarded is zero or next to zero. And it is so low because of the economic bubble which we currently find ourselves in.
We have said previously that we have learnt lessons, both for how we operate as a regulator, and for how the wider pensions regulatory system serves to protect consumers. FCA“The issue is not just one of the compensation process and methodology being unfair, it is that the delays synthetically introduced are the sole responsibility of the FCA.”
The FCA's response
An FCA spokesperson said where steelworkers have made a complaint, it needs to consider these and respond individually through the formal process it has.
“We know that the circumstances around BSPS have caused harm to steelworkers and communities,” the regulator said. “We will look at all the complaints we received individually and respond back to the steelworkers.
“We have taken a wide range of actions in response to BSPS, starting with on the ground events for advisers in 2017.
“This has included working to help steelworkers understand whether they received poor advice and how they can complain – including running a range of local events and publishing an ‘advice checker’.”
The FCA said more than 3,000 individuals have made a claim and that over £20mn of redress has been paid out by firms due to the action the FCA has taken.
“But we know that many people who could be due redress still haven’t made a complaint,” it said.
“So in November we confirmed our plans for a consumer redress scheme, paid for by firms, to help people have their case reviewed and have redress paid where it is owed.
“We have also implemented changes in how we work with other organisations in this area to share information and intelligence.”
The City watchdog said it has also acted to raise the standard of pension transfer advice more generally – by introducing new rules.
“We have said previously that we have learnt lessons, both for how we operate as a regulator, and for how the wider pensions regulatory system serves to protect consumers.”
sonia.rach@ft.com
What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know
