The Financial Conduct Authority said it has become aware that certain firms are making unsolicited offers to former British Steel pension scheme (BSPS) members who have not made complaints.
In an update today (January 26), the FCA said it is aware that four firms who are associated with the British Steel Action Group (BSAG) may be engaged in this conduct.
“We believe the actions by firms may be a deliberate attempt to exclude former members from participating in the [redress] scheme, binding them to receiving less money than they might be entitled to under the scheme,” the regulator said.
“If substantiated this is wholly unacceptable and constitutes serious malpractice.”
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.
The City watchdog said some firms have told consumers that their redress would amount to zero if it is calculated in accordance with FCA guidance.
“Preliminary evidence suggests that they are not following the guidance we expect them to follow when calculating redress,” it said.
“We are urgently looking into these cases and will consider taking action against any firm we find to be misleading consumers or making offers not calculated in line with our guidance."
However, a spokesperson for BSAG denied the claims of any offers being misleading.
BSAG said its members have two groups of clients: those who have complained, which are being dealt with by Financial Ombudsman Service and those who have not.
The clients who have not complained have to date received multiple communications encouraging complaints against firms, the spokesperson explained.
"The vast majority of BSPS clients who have not complained are happy," it said. "The FCA published their approach to redress under their proposed scheme on the November 28, 2022. This approach is being followed by BSAG firms when they make redress offers to their clients.
"The current market conditions mean the vast majority of settlements have either no redress or a very minimal redress profile. BSAG are not responsible for market conditions and should not be penalised for the current favourable conditions.
"If a steelworker can buy annuity without any top up from the firm, there is no legal reason why this should not happen. The BSAG members are close to their clients and report that the vast majority of their clients want to retain the flexibility of their personal pension arrangement."
The spokesperson explained that the BSAG firms have been asked by the FCA to report on the settlements they are making.
"All the firms will respond and provide the requested information. BSAG firms deny misleading offers. Offers have been made in line with the relevant guidance and any suggestion otherwise will be contested."
Expectations for firms
The FCA said it expects firms to treat customers fairly and to clearly explain the implications of accepting an offer before the scheme starts.
If a former BSPS member has made a complaint to a firm and the firm decides that the advice was unsuitable, the firm should inform them that the redress methodology will change on April 1, 2023 and that they have the option to wait until then before the redress calculation is carried out.
Accepting an offer now might mean former members are not included in the scheme and might mean they do not receive the right amount of redress, the regulator explained.
If former members do not take any action and do not reply to the offer from the firm, they will be included in the redress scheme the FCA has established, provided they are eligible.
“Firms will then be required to use our calculator when calculating redress if the advice was unsuitable,” it said.
“If consumers have their cases reviewed as part of the redress scheme, they can ask the Financial Ombudsman Service to check that the firm has calculated redress in accordance with the scheme rules."
sonia.rach@ft.com
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