FCA plans £71mn redress scheme for former British Steel members

In a consultation paper published on March 31, the FCA estimated that 1,400 steelworkers will receive £71.2mn in redress under the scheme.

In the paper, the FCA said the proposed scheme will cover those who transferred out between May 26 2016 and March 29 2018.

Consumers will be excluded from the scheme if they have already received redress, have referred their complaint to the Financial Ombudsman Service, have received a final outcome from a suitability assessment on their case, are an ‘insistent client’ or if they received advice outside the relevant period.

The FCA said some BSPS members might have received transfer advice outside the relevant period that is covered by the proposed scheme and that advice is not included in the scope.

These savers can make complaints in the usual way if they think the advice they were given might have been unsuitable. 

The FCA has found that almost half (46 per cent) of the advice it reviewed relating to BSPS was unsuitable.

The City watchdog first announced its plans for a redress scheme in December and set out that it will take strong action against impacted companies that try to avoid their responsibilities to pay compensation.

If the scheme goes ahead, the FCA will publish rules setting out how advisers must determine whether they gave unsuitable advice and whether they must pay compensation.

Independent checks and monitoring will be put in place to ensure companies comply with the rules.

The scheme is expected to be in place by early 2023, with individuals starting to receive compensation from late 2023.

The regulator said for those individuals who received advice from an insolvent business or one that no longer exists, their claims will be considered by the Financial Services Compensation Scheme.

The City watchdog emphasised that consumers can make a complaint now rather than waiting for the outcome of the consultation.

Sheldon Mills, executive director for consumers and competition at the FCA, said: “The circumstances around British Steel Pension Scheme transfers were exceptional, with former members receiving significantly higher levels of unsuitable advice compared with other cases.

“We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme.”

This article originally appeared on FTAdviser.com