Overview
On the 28th of November 2022, the FCA issued PS22/14, outlining the final scope of the – Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme.
The regulator’s concerns with the quality of the advice given to British Steel Pension Scheme members to transfer out of the scheme are well documented, and despite the regulator’s best efforts to encourage customers who may have suffered a financial loss to complain, only 10% of customers have done so. The regulator, therefore, has further concerns that customers will be ‘time barred’ from complaining by the time they realise that transferring away from the scheme was not in their best interests. As a consequence, the FCA is stepping in with the implementation of this redress scheme to remedy any consumer harm which has been suffered due to unsuitable advice. In scope, customers will have to ‘opt-out’ should they not wish to be part of the redress of the scheme.
Scope
The redress scheme covers consumers who received advice between 26th May 2016 and 29th March 2018 to transfer out of BSPS. The scheme requires firms who gave advice over this period to:
Assess whether it was suitable,
Tell consumers the outcomes of their assessments; and
Pay redress if the unsuitable advice caused the consumers to suffer a financial loss.
Where firms decide that the advice they gave was suitable, they will be required to pass consumer details on to the FCA so they can assist consumers to refer cases to the Financial Ombudsman Service for an independent review.
The FCA estimates that around 1,100 customers are in scope of the redress scheme.
Consumers not within scope of the scheme are:
Customers of firms who have already gone out of business or who go out of business during the scheme – these customers should make a claim to the FSCS
People who were given advice to transfer out of the BSPS but not between 26th May 2016 and 29th March 2018
People who have already accepted compensation
People who have already referred complaints to the Financial Ombudsman Service
People who transferred out of the BSPS after being given advice not to (i.e. insistent clients)
People who were out of time to make a complaint before the scheme was implemented – those who transferred out before 24th November 2016, unless they only became aware of the poor advice after 24th November 2019
People who had their advice reviewed by a skilled person using the FCA’s DBAAT and the customer was notified of the outcome
(Full FCA handbook rules are detailed in CONRED 3)
Next Steps for Firms
The scheme will start on 28 February 2023, allowing firms to prepare for implementation by that date. Firms will have until 28 March 2023 to identify all consumers within the scope of the scheme. Firms must write to all BSPS consumers within and outside the scope of the scheme by 28 March 2023. The letter will explain to the consumer that:
The firm will review the advice to transfer unless the consumer decides to opt-out; or
The case falls outside the scope of the scheme but consumers may still be able to make a complaint in certain circumstances.
Firms must consider the cases of all consumers who have not opted out of the scheme and contact consumers with the outcome of the review by 28 September 2023. If the advice was unsuitable and the consumer accepts the redress offer, firms must pay redress within 28 days.
How Square 4 Can Help?
At Square 4, we have a team of trusted, highly skilled, and highly experienced Pension Transfer Specialists who are able to make an independent assessment of the suitability of the advice given in line with FCA and FOS rules and guidance. Our team is efficient, effective and has reviewed a significant amount of DB transfers using the FCA’s DBAAT, including the BSPS. We also have an actuarial partner who is highly experienced at calculating BSPS redress. We know the risks, challenges, and common issues when reviewing DB transfers. We get it right the first time and relieve the resource pressures our clients are facing.
Get in touch with Simon Goryl – Advisory Director, if you would like to discuss how we can help at sgoryl@square4.com.
