On the go: The Financial Conduct Authority has extended the deadline for responses to its consultation looking at how it could change the way it calculates redress for those who were wrongly advised to transfer out of a defined benefit scheme.
The deadline for responses from the industry was September 20, the day after the Queen’s state funeral, which will be a UK bank holiday.
Alastair Rush, an adviser at Echelon Wealthcare, emailed the FCA on September 12 asking for the regulator’s thoughts on delaying the deadline by “a couple of weeks”.
Replying to Rush, a spokesperson at the watchdog said: “I can confirm we will be extending the deadline for the consultation to September 27.
“The relevant documents and website will be updated shortly with the new date and we are letting key and interested stakeholders aware of this important change.”
The regulator confirmed the week-long extension in an email to Pensions Expert’s sister title FTAdviser. However, at the time of writing, the relevant page on the FCA’s website still states September 20 2022.
As it stands, the methodology for calculating payouts works on quarterly market assumptions.
Two-year gilt yields have been rising, and when gilt yields increase compensation for DB pension transfers can fall.
One of the proposals is to move from quarterly to monthly market assumptions, which could help reduce potential dips in redress due to market volatility.
British Steel workers make up a large group that has suffered financial loss from transferring out of a DB pension scheme to a defined contribution scheme following non-compliant advice.
Last month, FTAdviser learnt that payouts from the Financial Services Compensation Scheme to these steelworkers had fallen by around £30,000 this year as a result of challenging market conditions.
This was based on the average FSCS payout paid to steelworkers represented by one company dropping from £72,000 in the first quarter of 2022 to £40,000 since July 1.
Another suggestion has been to base redress calculations on an old date, rather than a current one subject to fresh volatility.
The British Steel Action Group, which represents advice companies facing redress bills for DB transfer advice, has argued that “any attempt to justify assumption metrics from an old date to increase redress today is a fallacy”.
The FCA intends to publish a reviewed copy of the methodology sometime this winter, but an exact date has not been set.
This article first appeared on FTAdviser.com
