The Financial Conduct Authority (FCA) has taken action against an adviser it says avoided its liabilities under its British Steel redress scheme.
The regulator said that David Stock & Co Limited had made unsolicited of £50 to 48% of its clients that were ex-members of the British Steel Pension Scheme (BSPS) and had not yet complained about receiving unsuitable pension transfer advice.
The FCA added these unsolicited offers weren’t calculated in line with its guidance, calling them a “deliberate attempt” to exclude clients who received an offer from the redress scheme. It has now imposed requirements on the firm, which now must treat any ex-BSPS members who accepted these offers in the same way as those that didn’t.
The regulator noted that “this will ensure all eligible David Stock & Co customers receive the redress they are entitled to.”
How does the FCA’s BSPS redress scheme work?
Under the FCA’s redress scheme, firms must review the financial advice they gave to BSPS members and pay redress to anyone who lost money because they provided unsuitable advice to transfer out of their BSPS pension. In early 2022, during a consultation before the formal announcement of the redress scheme, Labour MP Nick Smith criticised this approach as being tantamount to firms being able to mark their own homework.
The aim of the redress scheme is for firms to put ex-BSPS members back into the financial position that they would have been in at retirement had they not transferred their pension out of the BSPS.
The FCA has also placed several firms under asset restrictions to ensure that all affected individuals receive the compensation they are entitled to. Unfortunately, many firms who provided BSPS transfer advice have already gone out of business, meaning those liabilities will fall on the Financial Services Compensation Scheme (FSCS) and that many ex-BSPS members will see their redress capped at the lifeboat fund’s £85,000 compensation limit.
David Stock & Co the third firm the FCA has taken action against
In addition to the action against David Stock & Co, the regulator has already taken action against two firms for conducting the same practice.
In February 2022, the FCA told Abbey Lane Financial Associates Limited and Estate Capital Financial Management Limited to stop making unsolicited offers. The City watchdog said that Abbey Lane had made offers of £100 to 82% of its clients who were ex-BSPS members and that Estate Capital had made offers of £300 to its clients in the same situation.
This action comes just days after the FCA published its latest “Dear CEO” letter, in which it raised concerns about firms that had made redress calculations using third-party online portals before the redress scheme began.