The FCA has warned that a judicial challenge to the regulator's British Steel Pension Scheme (BSPS) redress plans by an IFA pressure group might cause the scheme to be delayed and prevent steelworkers from filing complaints with the Financial Ombudsman Service (FOS).
The FCA stated that it saw the IFAs' legal action as "an attempt to delay the payment of reparations that is due to some former BSPS members" in a notice that was posted on its website on Friday, January 20.
The British Steel Action Group, a collection of advisory businesses that provided guidance to BSPS members, officially challenged the regulator's redress programme in court, according to the FCA. The organisation is represented by Midlands-based law firm FS Legal Solicitors.
The £49 million restitution programme, which was announced in November, is scheduled to start in February 2023 and will impact 343 advisory firms. It will also provide rewards to more than 1,000 steelworkers.
‘We are confident that our decision to implement a scheme will ultimately be upheld,’ the FCA said.
‘However, in what we consider to be an unlikely outcome, if the scheme is cancelled the usual time limits for complaining and referring complaints to the FOS will apply. This risks former BSPS members who think they may have received poor advice to transfer out in 2016 or early 2017 being timed out from making a complaint.’
The FCA urged firms to continue preparing to implement the redress scheme notwithstanding the court challenge, as well as steelworkers to file complaints with the FOS if they received advice prior to 30 April 2017.
Uncertainty surrounds the legal challenge's extent. In April, FCA CEO Nikhil Rathi made the first admission that some advisers were suing the regulator over its evaluation of the fitness of the guidance.
The FCA's data gathering procedure, including its Defined Benefit Advice Assessment Tool, to evaluate prior pension transfer advice, has both been criticised by FS Legal Solicitors, who have previously called for a re-consultation by the FCA on a proposed redress scheme.
Concerned that the current economic climate could result in steelworkers being considerably under-compensated, a law firm representing former British Steel employees asked the FCA to take the suspension of complaints and redress calculations into consideration back in August.
Defined Benefit (DB) schemes and the advice to transfer pensions out have been a source of increasing complaint with regulators. Often advice to move away can be correct but when it’s wrong the pension fund losses can be huge.
To find out more about how our DB claims experts can help you understand pension losses and if appropriate make a claim for compensation, you can call on freephone 0800 046 9976, email us at info@smoothcl.co.uk or complete our quick online enquiry form Make an Enquiry - Smooth Commercial Law (smoothcl.co.uk) and one of our experts will get in touch with you.
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