British Steel Feb 13 2023

FSCS pays out £67mn in BSPS compensation

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FSCS pays out £67mn in BSPS compensation

The Financial Services Compensation Scheme has paid out just over £67mn in compensation to British Steel Pension Scheme members.

The FSCS told FTAdviser it had paid out this compensation to members as of February 9.

There has been just over £30mn of ‘uncompensated loss’, where the relevant compensation limit (£50,000 or £85,000 depending on the firm involved) has meant that FSCS was unable to fully cover a customer’s losses.

In total, it has completed 1,499 claims from former BSPS members who were advised to transfer out of the scheme.

In December, the Financial Conduct Authority published its response to the feedback it received to the ‘Compensation Framework Review’ discussion paper.

The FCA said it is considering whether to increase compensation limits for certain pension claims.

In the feedback statement, the regulator said several respondents called for a review of current limits for claims about pension products. 

The discussion paper, published in December 2021, considered the limits on compensation payable by the FSCS and wanted to explore whether stakeholders considered whether current compensation limits provided appropriate protection.

The paper outlined a number of ideas, including that high-net-worth or sophisticated investors could be barred from claiming compensation through the regulatory channels, that investment advice could be excluded from FSCS protection and that firms could be required to pay a premium on levies for carrying out higher risk activities or selling risky products.

At the time, the FSCS said it encouraged any effort to establish the right protection for consumers at a cost that is sustainable to the industry.

In March, the FCA set out plans to deliver compensation to former members of the BSPS who received unsuitable advice to transfer out of their pension.

It estimated that 1,400 steelworkers will receive £71.2m in redress under the scheme. 

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.

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