On the go: The Financial Conduct Authority’s redress scheme for members of the British Steel Pension Scheme launched on February 28.
Advisers will have until March 28 to write to their BSPS clients to inform them that they are going to review the advice given to them to transfer out of the scheme. The regulator said it expects that most redress will then be paid by the end of March 2024.
Once an adviser has completed their review, they must write to the client to let them know whether the advice was suitable or not.
If the client disagrees with the adviser’s conclusion, the FCA has said it can arrange for the Financial Ombudsman Service to review the advice independently. It has warned that it will be “watching firms closely to make sure they are reviewing advice properly”.
All advice must be reviewed by September 28 this year.
If the adviser concludes that the advice given was wrong, they will calculate what the client could be owed using the calculator developed by the FCA.
Once the money owed is calculated, clients who requested a lump sum payment will need to receive it by December 28, while clients who requested a payment into their pension should receive it by February 28 2024.
Last week, the FCA was forced to issue supervisory notices to two companies that made unsolicited offers to BSPS members who are likely to be part of the redress scheme.
This follows on from earlier in February, when the regulator said it had identified 15 companies that are engaged in the misconduct — most of which it said are associated with the British Steel Action Group.
The BSAG has made a legal challenge against the FCA’s redress scheme.
Open-ended property funds
Elsewhere, the FCA has published its biannual regulatory initiatives grid, which outlines and updates its regulatory plans for the year. The regulator provided an update on the proposal to introduce notice periods for open-ended, daily dealt property funds.
British Steel: How did we get here?
During 2017, BSPS members were asked to make decisions about their pensions as part of a restructure of the BSP scheme.
About 8,000 members transferred out, with transfers collectively worth about £2.8bn.
But concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA that resulted in a number of advice firms – key players in the debacle – stopping their transfer advice service, while others went out of business.
The debacle created a mountain of liabilities, which lawyers believe could end up costing the industry up to £300mn.
It said the policy proposals are being finalised in view of feedback received, but it has not yet provided any further information on when these rules will come into affect.
It is understood that part of the reason for the delay is that an issue surrounding the introduction of the proposed notice period has not been resolved. Its introduction could mean that relevant funds might no longer be qualifying investments for stocks and shares Isas, which would have an impact on end investors.
Last year, experts in the field said the open-ended property fund sector is “in a state of paralysis” and that there is no obvious solution to the liquidity mismatch causing sustained outflows from the sector.
The FCA opened the consultation into the future of open-ended property funds; however, in May 2021, it said it would not confirm specific property fund rules until a consultation on the long-term asset fund had been completed.
This was concluded in October 2022, but the regulator has not outlined any further details to date.
This article first appeared on FTAdviser.com
