FCA pledges to defend BSPS pensions redress scheme in face of legal challenge

Advisory firms have taken court action over plans to compensate pension scheme members over advice given.

The FCA’s redress scheme for former British Steel Pension Scheme members it believes were given incorrect advice has been hit by a legal challenge from advisers.

The regulator believes that the legal challenge is an attempt to delay the payment of redress. The BSPS scheme was announced in November 2022, and the average payout is expected to be £45,000 ($54,000).

The scheme, created to help former BSPS members who were advised to opt out of their pension scheme between May 26, 2016 and March 29, 2018, is believed to affect over 1,000 individuals.

Behind the legal challenge is the British Steel Action Group, a group of pension advisory firms advised by FS Law (also known as FS Legal Solicitors LLP).  

Vigorous defense

The FCA stated: “We are confident that our decision to set up a redress scheme is appropriate and will vigorously defend it. In making our decision we considered extensive stakeholder feedback from the consultation process.”  

The FCA advises that firms should continue to prepare for the implementation of the scheme, and promises to inform former BSPS members, firms and stakeholders about any scheme timings.

“Our redress scheme means firms must review the advice given to BSPS members even if the time limits for making a complaint run out after the scheme starts.”

Wide consultation

When the scheme was announced in 2022, Sheldon Mills, Executive Director for Consumers and Competition at the FCA said: “We have consulted widely on a redress scheme for British Steel Pension Scheme members. We found that almost half the advice given to members was unsuitable – an exceptionally high level compared with other cases. Today we’re confirming the rules for the redress scheme, so that BSPS members can get the retirement they worked for.”

The FCA is confident that the redress scheme will be upheld. However, if the scheme is cancelled, the usual time limits for complaining and referring complaints to the Financial Ombudsman Service will apply.

FCA guidance on how to make a complaint

To make a new complaint: Former BSPS members, who received advice before April 30, 2017, should complain now and refer their complaint to the Financial Ombudsman if they are unhappy with the firm’s response.

Already complained and unhappy with the response: If former BSPS members have already complained and are unhappy with firm’s response, they should refer the matter to the Financial Ombudsman within six months of the date of the response to ensure that they are not timed out if the scheme is cancelled.