The Financial Conduct Authority (FCA) has published final rules for a redress scheme for former members of the British Steel Pension Scheme (BSPS) who received unsuitable advice to transfer out. The FCA expects that more than 1,000 consumers will receive redress as a result.
Firms will have to review the advice they gave and pay redress to those who lost money because of unsuitable advice.
Dr Matthew Connell, director of policy and public affairs at the PFS, noted: “We recognise that a significant number of BSPS members were given unsuitable advice and that the FCA is right to set up a Section 404 scheme to ensure that redress is paid to those members who qualify for it. It is right to take steps to ensure that firms have the resources to pay compensation.
“We should remember that the FCA estimates that more than half of transfer cases were found to be suitable, in spite of a chaotic transition process to the new British Steel pension arrangements, in which key information was only given to members in a piecemeal way by the BSPS.
“This figure is in stark contrast to Financial Ombudsman Service (FOS) uphold rates for BSPS complaints, which were running at 98% at the beginning of 2022.
“It is important that FOS judgments follow the approach set up by the FCA for the Section 404 scheme. If a complaint to the FOS at the end of the process is almost certain to be upheld, then ultimately consumers will end up paying a compensation bill that is not justified by the facts.”