FCA urged to reconsider BSPS compensation plans

The Personal Finance Society (PFS) has called on the Financial Conduct Authority (FCA) to rethink how it plans to pay compensation to those who have lost money in the British Steel Pension Scheme (BSPS) scandal.

Currently, the FCA plans to pay £71.2 million in compensation to savers who received unsuitable advice to transfer out of the BSPS.

The PFS call is the latest development in the long-running BSPS saga, which has included:

PFS says FCA scheme misses the point

Central to the PFS’s argument is the notion that BSPS members have given up a guaranteed income by following unsuitable transfer advice. Specifically, the PFS wants the FCA to reconsider solely awarding a lump sum and is also calling for the Department for Work and Pensions (DWP) and Pension Protection Fund (PPF) to collaborate and ensure clients are either re-admitted to the BSPS or admitted to the PPF.

As well as having concerns about how members will receive redress, the PFS is also looking to ensure advisers are treated fairly.

Specifically, the PFS is concerned about the proposed Defined Benefit (DB) Advice Assessment Tool process, arguing that it may not always be adequate to assess the individual circumstances of each case. As such, the PFS wants advisers to have the right to appeal to an independent and qualified transfer specialist for a full review of the cases and specific circumstances in question.

The PFS has already shared data with the FCA highlighting cases where the BSPS told advisers that clients couldn’t take early retirement options as they weren’t old enough. Such cases are being used to stress that the FCA’s assessment tool process isn’t advanced enough to establish a complete picture of what financial advisers could reasonably have been expected to achieve, given they were working with limited information.

In addition, the PFS has highlighted that those using the regulator’s tool only received two days’ training. In contrast, becoming a qualified pension transfer specialist takes around 13 weeks.

Discussing the need to ensure both BSPS members and advisers are treated fairly in quotes reported by Pensions Age, the PFS’ director of policy and public affairs, Matthew Connel, 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.

“Given that so much of the detriment that applies to BSPS members relates to a loss of guaranteed income, we do not think it is right for the compensation scheme to mandate those who received poor advice only receive a lump sum.

“The regulator needs to rethink their approach and work with the DWP, The Pensions Regulator plus the PPF 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.”

Are you going to get the compensation you deserve?

If you were a BSPS member and have lost monies after receiving unsuitable advice to transfer, contact us here for a free, no-obligation review of the advice received and your transfer.

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