The Financial Conduct Authority (FCA) has warned that its proposed redress scheme for the British Steel Pension Scheme (BSPS) scandal could see advice firms pay over £140m in compensation.
The regulator published its proposed redress scheme this morning, saying advice firms could pay over £70m of additional compensation to British Steel workers.
Over £70m has already been paid out to BSPS members in compensation.
The BSPS redress scheme will generally follow the same methodology as all DB transfer cases, but eh regulator has adapted some elements to reflect the particular circumstances of the BSPS scheme.
The regulator has also proposed setting up a redress calculator to help make calculations more consistent, ensure BSPS members receive “fair and quick” redress, and to reduce the overall cost of calculations to advice firms.
The details of the proposed compensation scheme were published this morning as part of a consultation on changes to calculating redress for non-compliant pension scheme transfer advice.
The FCA has been heavily criticised over how it has responded to scandal, with MPs accusing the regulator of having “inadequate” oversight of the firms involved.
The FCA consultation will close on 20 September.
The regulator will publish changes to its general approach and how it will implement the proposed BSPS consumer redress scheme this winter.
It expects the BSPS redress scheme to come into force at the start of next year, with members who are eligible to receive compensation later in 2023 or early in 2024.
In 2017, many British Steel workers were advised to transfer out of their defined benefit pension into a defined contribution pension, typically a personal pension or a Self-Invested Personal Pension (SIPP). The scandal has attracted national attention and criticism.
By transferring to a private pension arrangement, the BSPS victims would have potentially lost benefits already built up in the British Steel Pension Scheme.
