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FCA Announcement and Dear CEO Letter – British Steel Pension Scheme

January 7, 2022

What has happened?

In December 2021, the FCA’s Board asked for a consultation to be prepared on a redress scheme under s404 of the Financial Services and Markets Act for former members of the British Steel Pension Scheme (BSPS) who were advised to transfer their pension.

Why is this happening?

Subject to final approval of the consultation documents by its Board, the FCA expects to consult on this subject by the end of March 2022, having gathered further evidence and following engagement with stakeholders.

A redress scheme would be limited to BSPS transfer advice. BSPS is a highly exceptional case with the FCA’s analysis indicating significantly more unsuitable advice (47%) than was observed in reviews of higher-risk firms in non-BSPS cases (17%).

In a Dear CEO letter issued in December 2021, the FCA set out its expectation that firms in the scope of a potential redress scheme (that is, those that gave BSPS advice between 1 March 2017 and 31 March 2018) should retain assets and should not try to avoid their regulatory responsibilities. Specific areas covered by this letter included;

  • The need for these firms to review their financial resources if they have redress liabilities,
  • The need for these firms to retain assets that may form part of their redress liabilities,
  • The need for these firms to accept their responsibilities, and in particular to avoid any attempt to apply to cancel their Part IV permissions, and also to carry out robust due diligence on any of their Controlled Function applicants previously involved with BSPS advice, and
  • That the FCA will contact these firms in early 2022 in order to confirm its understanding of the BSPS business written by them and to collect information to understand firms’ potential exposure to liabilities relating to BSPS transfer advice.

The FCA has warned firms that it will take action if a firm attempts to avoid redress liabilities.

How can we help you with reviewing defined benefit pension transfer advice?

If you’d like to know more about how we can help you with your back book reviews of any defined benefit pension transfer advice cases, or with any other regulatory compliance issues, our specialist team is here to help.

Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.