The Financial Conduct Authority (FCA) announced that the British Steel Adviser Group (BSAG) has dropped its legal challenge against the regulator’s redress scheme for ex-British Steel Pension Scheme (BSPS) members.
The legal challenge was launched by FS Legal Solicitors on behalf of a group of pension advice firms in January 2023.
Since then, the FCA has slammed companies, including some of BSAG, for making “misleading” offers to ex-BSPS members.
The regulator also named and shamed firms – as it formally requesting Sheffield-based Abbey Lane Financial Associates Limited and Swansea-based Estate Capital Financial Management Limited to withdraw their redress offers.
The redress scheme was given the greenlight in November 2022. Firms have to review the advice they gave and pay compensation to those who received unsuitable financial advice. The watchdog expected more than 1,000 BSPS members to benefit from the scheme.
At the time, the FCA said it estimates the total redress paid to consumers under the scheme to be £49m ($61m, €56m) under its “central scenario”.
‘Vigorously defend’
The FCA said on 12 April: “Our view all along has been that the challenge was without merit and that we would vigorously defend the scheme.
“This challenge has, in our view, been pursued unreasonably with little intention to go to trial so we are also pleased BSAG has agreed to make a substantial contribution to our costs. We have publicly warned and taken action against certain BSAG firms for making unsolicited offers to former BSPS members.
“Under the redress scheme, firms have to review the advice they gave former BSPS members to transfer out and pay redress to those who lost money because the advice was unsuitable.”
Gareth Fatchett, partner at FS Legal Solicitors, added: “BSAG and the FCA know that the final battle will be over the way in which the redress calculator will operate. Most firms do not have either a significant scheme population or significant redress using PS22/13. When the Dear CEO letter was issued in December 2021, the vast majority of the BSAG firms would have become insolvent. Based on PS22/13, the vast majority of firms will survive the BSPS saga. That is a major victory for the group.”
“BSAG expect a significant number of opt outs and more importantly a significant number of calculations which have no redress payable. The outstanding question is to what extent the scheme calculator will depart from the PS22/13 standard. Too much departure and a second more focused challenge is highly likely.”
