FCA to consult on redress plan for British Steel pensioners

The UK’s financial regulator said it was consulting on a redress scheme over the British Steel pension transfer scandal.

More than 7,500 workers lost huge amounts of money after acting on poor advice in 2017 to take money out of the scheme. The Financial Conduct Authority’s consultation is expected to be launched in March 2022.

Earlier this year, UK lawmakers accused the FCA of being “unfit for purpose” and were severely critical of the regulator’s apparent inability to help wronged consumers affected by the scandal.

The FCA said firms which will have to repay former investors “should retain assets and should not try to avoid their responsibilities”.

It also warned that it would take “such action as it deems necessary if a firm attempts to avoid redress liabilities”.

It has sent out a letter to bosses of the firms who gave pension transfer advice to scheme members between March 2017 to March 2018.

“Under a redress scheme, firms would be required to review advice they gave to BSPS members to transfer their pension. If the advice was unsuitable and resulted in a financial loss, the firm would be required to provide compensation,” the FCA said.

Former scheme members should continue to check whether they received unsuitable advice and find out how to complain via the FCA's dedicated web page.

The National Audit Office launched an investigation into the FCA's handling of the scandal in October, and is aiming to publish its findings in spring 2022.

It is estimated that around 47% of steelworkers received “unsuitable” pension transfer advice, prompting the FCA to call the debacle a “highly exceptional case”.

In August, the FCA slapped its first £1.3m fine on an adviser involved in the matter, describing him as “seriously incompetent” in providing retirement savings transfer advice to scheme members.