The Financial Conduct Authority, alongside the Fos and FSCS, have offered a total of £106mn in redress to 1,870 former British Steel pension scheme members, although its redress scheme has paid out less than expected.
The regulator has been working with both organisations to help those who transferred out of the BSPS following poor advice.
In a report published today (July 24), the FCA revealed that the £106mn total comprised £69.7mn from the FSCS (pre-scheme), £19.3mn from the FCA skilled person review, £8.4mn from the Fos and £8.7mn from the FCA’s redress scheme.
According to the regulator, because of “changing economic conditions”, money paid out under its redress scheme (£8.7mn) was lower than its £50mn estimate.
It estimated 1,744 former members received unsuitable advice but were not offered a redress payment because they had not lost out financially as a result of the unsuitable advice.
A total of 360 former members were offered redress comprising £3.8mn offered by firms and around £5mn offered by the FSCS.
The FCA explained: “Redress is calculated based on the money needed to top up a personal pension, to buy an annuity at retirement that provides an income similar to what the person would have received had they stayed in the BSPS.
“Since we introduced the redress scheme, the expected cost of funding a guaranteed retirement income through an annuity has fallen.
“We understand some former BSPS members will be disappointed to have received no, or less, redress than they were expecting.
“Redress aims to ensure, as far as possible, that former members are put back in their original financial position. So, some former members have received unsuitable advice, but not been offered redress, as they have not lost out financially.”
There are still 200 claims working their way through the redress scheme the regulator confirmed.
As of April 28 2024, 32 redress calculations (27 scheme, five pre-scheme) are awaiting a Fos decision.
While the FSCS is still to process 217 claims, made up of 138 scheme and 79 pre-scheme claims as of April 24 2024.
The FCA confirmed the lifeboat scheme is still accepting new BSPS claims so it expected this number to rise.
Assessment of advice
When the BSPS restructured in 2017, around 7,700 members decided to transfer out of the scheme after receiving advice.
The FCA estimated 46 per cent of this advice was unsuitable and the poor conduct of some advisers caused significant harm and distress.
As a result of its actions, the FCA said more than 6,500 former members have been supported through its redress scheme or by the Fos and FSCS.
Under the redress scheme firms had to review the advice they gave and pay redress to those who lost money because of unsuitable advice.
As part of the scheme firms reviewed the advice they gave and found 49 per cent of it was unsuitable.
Firms reported 49.1 per cent had their advice assessed as suitable, while 49.4 per cent was unsuitable.
In 34 cases there was missing information, which prevented the firm from making an assessment.
