This effort, in collaboration with the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS), supports more than 6,500 members who received poor financial advice leading to pension transfers. The FCA continues to pursue firms and individuals responsible for the unsuitable advice to ensure accountability and compensation for affected members.
Regulators continue efforts to support British Steel Pension Scheme Members misled by financial advisers
The FCA, FOS, and FSCS have been engaged in a sustained effort to support members of the BSPS who were misled into transferring their pensions. This ongoing initiative seeks to ensure that affected individuals receive appropriate compensation and guidance.
Key actions and timeline:
FCA’s interventions:
- 2017: The FCA identified widespread unsuitable advice given to BSPS members, leading to significant financial losses for many.
- 2018 Onwards: The FCA initiated actions to hold financial advisory firms accountable, ensuring they compensate affected members.
- 2023 and 2024: The FCA has been actively reaching out to BSPS members to inform them of their rights and available support. This outreach includes detailed guidance on how to seek redress.
Compensation and redress:
The FCA's report confirms that the total redress includes £69.7 million from the FSCS (pre-scheme), £19.3 million from the FCA skilled person review, £8.4 million from the FOS, and £8.7 million from the FCA’s redress scheme. Due to changing economic conditions, the amount paid out under the FCA’s redress scheme was substantially lower than the initial estimate of £50 million.
The report also confirms that 1,744 former members received unsuitable advice but were not offered redress as they had not suffered financial loss as a result of the transfer.
A total of 360 former members were offered redress, comprising £3.8 million from firms and around £5 million from the FSCS. The FCA explained that redress is calculated to ensure individuals can buy an annuity at retirement that provides an income similar to what they would have received had they stayed in the BSPS.
Awareness and outreach:
Efforts to increase awareness among BSPS members about their rights and the necessary steps to seek redress remain ongoing. The FCA has published detailed guides and FAQs on their website to help individuals understand the compensation process. These initiatives have been consistently reinforced throughout 2023 and continue into 2024.
Outstanding claims:
As of 28 April 2024, there are still 200 claims working their way through the redress scheme. The FCA confirmed that 32 redress calculations are awaiting a FOS decision, and the FSCS is still processing 217 claims. The lifeboat scheme continues to accept new BSPS claims, so the number of claims is expected to rise.
Assessment of advice and enforcement:
When the BSPS was restructured in 2017, around 7,700 members decided to transfer out of the scheme after receiving advice. The FCA estimated that 46% of this advice was unsuitable, causing significant harm and distress. Firms reviewed their advice under the redress scheme and found 49% of it unsuitable.
Before the redress scheme started, the FOS received nearly 1,500 complaints from members, with 86% of cases upheld in the consumer’s favour. Additionally, 1,768 former BSPS members made a claim with the FSCS, with 1,257 being upheld.
The FCA has conducted around 30 enforcement investigations into BSPS transfer advice, resulting in 15 individuals being banned from working in financial services. Firms and individuals have been required to pay fines or make payments totalling £8.87 million to the FSCS.
The coordinated actions of the FCA, FOS, and FSCS aim to rectify the financial harm caused to BSPS members by ensuring they receive appropriate compensation and support.
Since November 2021 and more widely than the BSPS, there have been much more stringent process requirements for DB pension trustees in considering and processing transfer requests, showing the efforts made to protect members. Although these requirements are designed to prevent pension scams, rather than preventing people making a poor financial decision on the advice of a regulated adviser, all of these efforts underscore the commitment of these regulatory bodies to protect consumers and maintain confidence in the financial advisory industry.
With extensive experience in managing complex pension transfer cases for individuals, professional advisers, pension scheme members and pension scheme trustees, we offer expert guidance and dedicated support to ensure transfers are carried out appropriately and, where issues do arise, that they result in a fair and reasonable regulatory outcome and related compensation. Trust us to navigate the intricacies of financial redress with professionalism and precision.
