The Financial Conduct Authority has stopped a firm that advised on transfers from the British Steel Pension Scheme from disposing of its assets.
In a statement published today (April 21), the FCA said it stopped David Stock & Co Limited discarding its assets without the regulator’s permission.
The FCA said DS&C was not able to demonstrate that it had adequate resources, which is a minimum requirement for firms regulated by the FCA.
In addition, the regulator said that imposing the requirement is in the interests of its "statutory objective to protect consumers".
DS&C has the right to refer the FCA's decision to the upper tribunal for review.
This follows on from the FCA’s consultation launched last month on a redress scheme for former members of BSPS.
The City watchdog 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.
At the time, the City watchdog wrote to firms who had advised on BSPS making clear that firms should not dispose of any assets and maintain adequate financial resources.
This is to ensure that firms can meet the costs of carrying out a review and compensating customers for any unsuitable advice they may have given if the scheme is implemented.
The FCA said it will impose requirements on firms when they are unable to demonstrate they have adequate financial resources, have failed to act in line with the regulator’s instructions to protect assets or are attempting to take any action to avoid potential compensation payments.
The redress scheme will cover those who transferred out between May 26, 2016 and March 29, 2018.
Consumers will be excluded from the scheme if they have already received redress, have referred their complaint to the Financial Ombudsman Service, have received a final outcome from a suitability assessment on their case, are an ‘insistent client’ and if they received advice outside the relevant period.
Redress represents a transfer to BSPS members who received unsuitable pension transfer advice from the firms that provided that advice, to the extent that they remain in business.
The regulator said it will continue to monitor firms who have advised on BSPS transfers and take action where necessary.
The 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 Financial Conduct Authority 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 £300m.
In September, the FCA and FSCS travelled to Swansea to meet steelworkers who could be due compensation but were met with mixed feelings, with some showing no interest while others claimed they were unable to book a place.
The City watchdog also travelled to Swansea in November to meet steelworkers about bringing possible claims against their adviser.
Earlier this year, the FSCS said it had paid out more than £36.5m in compensation to BSPS members, as of January 25.
sonia.rach@ft.com
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