The FCA has been challenged by The Personal Finance Society (PFS) over their approach to compensating British Steel Pension Scheme (BSPS) members. The PFS has reported that the FCA’s assessment tool process is not sophisticated enough.
It has been reported that the PFS has asked the FCA to abandon plans to mandate compensation in the form of a lump sum as part of its proposed redress scheme for steelworkers who received unsuitable advice in 2016, 2017 and 2018. If the plans are approved this doesn’t address the main issue of BSPS members giving up a guaranteed long term income.
The FCA estimates around 1,400 steelworkers received unsuitable defined benefit pension transfer advice in 2017 and 2018 for a combined total of £71.2m in redress.
The PFS highlighted cases where advisers were working with limited information during the BSPS scandal, having for instance been told by the Trustees of the BSPS scheme that early retirement options could not be issued as their client was not old enough.
Matthew Connell, director of policy and public affairs of the PFS, said: ‘We accept that there were very poor practices among some firms involved in giving advice to BSPS members. However, the FCA research shows that good advice was also given, which means the review must be fair, proportionate, and operate on a case-by-case basis.’
The PFS is also recommending that the Department of Work & Pensions and the Pension Protection Fund work together to ensure clients are readmitted to the British Steel Pension Scheme or admitted to the Pension Protection Fund.
Connell added: ‘The regulator needs to rethink their approach and work with the Department for Work & Pensions, The Pensions Regulator plus the Pension Protection Fund to ensure British Steel workers retirements are put back in the financial position they would have been in if they were not advised to transfer out of the BSPS.’
The FCA proposed British Steel redress scheme could see up to 300 advisers go out of business.
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