The Financial Conduct Authority is using emergency powers to prevent financial advice firms that advised on British Steel pension transfers from disposing of their assets.
The rules were introduced without consultation “in light of the risk that some firms will take steps to get rid of their assets” during the proposal period, it said. They will come into force from 27 April 2022.
The measures are designed to ensure advice firms will have adequate financial resources to pay any potential compensation to British Steel Pension Scheme (BSPS) victims.
Proposals for a redress scheme were unveiled at the end of March 2022, to deliver approximately £71.2m ($94m, €85.4m) in compensation to those who received unsuitable financial advice. On the same day, the FCA sent a ‘Dear CEO’ letter to advice firms urging them not dispose of any of their assets as a result.
The emergency rules also follow an asset disposal ban on BSPS advice firm David Stock & Co on 21 April 2022.
‘Swift’ actions
The temporary measures will apply to firms that advised five or more BSPS members to transfer out between 16 May 2016 and 29 March 2018.
The companies in question will have to report to the FCA whether they can meet the potential cost of the BSPS redress. Until they have confirmed they have sufficient resources for compensation, they will be bound by the emergency measures, the regulator said.
If the scheme is introduced, the watchdog may consult on extending the temporary rules until all firms have paid the redress owed.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Firms who gave poor advice to British steelworkers must ensure that they retain assets and funds to pay redress under our proposed scheme.
“We are using these emergency powers today to prevent firms from avoiding paying any redress that is due to their customers and to help reduce the potential burden on the Financial Services Compensation Scheme.
“We will act swiftly if the rules aren’t being followed.”
