MPs to quiz FCA chief over BSPS scandal

Nikhil Rathi will be joined by Nausicaa Delfas and Caroline Rainbird, the heads of the Financial Ombudsman Service and the Financial Services Compensation Scheme respectively.

All three executives will be questioned by the Public Accounts Committee on the fates of 7,700 BSPS members who have transferred a collective £2.8bn out of the pension scheme, with some of these steelworkers receiving “unsuitable” advice and incurring “significant” losses. 

A date for questioning is yet to be set, but the committee has asked for evidence to be submitted ahead of April 20.

Questions will focus on “the activities the FCA has undertaken to regulate financial advice in the BSPS case”, “its plans for supporting steelworkers who may be entitled to redress”, and “the extent to which compensation is being delivered”, according to the committee.

The inquiry will hinge on a report published by the National Audit Office on March 18, which found 263 pension scheme members have lost £18mn of redress to date because of financial advisers going into liquidation and the limits to current compensation provided.

While the total loss for each steelworker is not recorded, the average individual loss for claims made to the FSCS is £82,600.

This figure was down in large part to the regulated advice market, which the NAO said “failed to protect them adequately” with 47 per cent of advice deemed to be “unsuitable”.

The report also concluded that despite “high levels of unsuitable advice”, to date “only a small proportion” of BSPS members have made a complaint through the statutory redress organisations. 

“The FCA, the FOS and the FSCS should reflect on their experiences in trying to reach affected consumers to understand what worked well and what could be improved in future,” the NAO said in its report summary.

Issues the UK’s financial regulators still need to overcome include the fact that the redress arrangements have not compensated all individuals fully, that the costs of redress has impacted on the wider financial services industry, and that the number of companies providing direct benefit pensions transfer advice “has more than halved”, the report stated.

Responding to the report, the industry called for the government and regulators to play a more “active role” in protecting pension savers.

Blaenau Gwent Labour MP Nick Smith said last week that “not enough has been done to hold those responsible” for the scandal to account. He said advisers’ “introducer cronies” have so far evaded action.

“I believe that many of these instances involved conspiracy and possibly warrant prosecution as criminal cases,” he said.

In December, the FCA began preparing to consult on a redress scheme for BSPS members and is expected to consult on this by the end of March 2022 having gathered further evidence and following engagement with stakeholders.

The redress scheme would be limited to BSPS transfer advice given between March 1 2017 to March 31 2018, and would ask companies to review their advice, and if found unsuitable provide compensation.

This article originally appeared on FTAdviser.com