The Financial Conduct Authority (FCA) has set out its final guidelines to extend asset retention rules for firms that provided pension transfer advice to British Steel Pension Scheme (BSPS) members.
Following a consultation, the UK regulator has confirmed that the temporary BSPS asset retention rules will be extended so that they continue to apply until firms have resolved all relevant cases that are subject to the rules of the BSPS consumer redress scheme and other relevant BSPS cases outside the scheme.
The FCA said that this intervention will “help ensure that the firms responsible for giving bad BSPS advice meet the cost of the redress liabilities that arise and reduce the risk that the firm fails with costs being passed to Financial Services Compensation Scheme (FSCS) levy payers”.
This will affect firms that provided ex-BSPS members with advice to transfer during the period of 26 May 2016 to 29 March 2018, subject to certain exclusions, and their insurers. This will include firms that are subject to the BSPS consumer redress scheme, plus firms whose BSPS complaints have been referred to the Financial Ombudsman Service (FOS) or are subject to a past business review, which are not in scope of the consumer redress scheme, but otherwise would have been.
The extended asset retention rules will apply from midnight on 31 January 2023. The current temporary asset retention rules continue to apply up to 31 January 2023.
In April 2022, the UK watchdog used its emergency powers to introduce the rules 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. The measures were designed to ensure advice firms will have adequate financial resources to pay any potential compensation to British Steel Pension Scheme (BSPS) victims.
Dear CEO letter
Elsewhere, the FCA has sent out ‘Dear CEO’ letters to pension providers and any other firm that administer or manage the proceeds of BSPS transfers.
This is to “ensure these third-party firms are aware of their obligations regarding the timely provision of information”, the regulator said.
As part of the redress scheme, pension providers and third-party firms may receive requests for information from advice firms.
The FCA said it expects them “to cooperate with these requests and comply with the obligations” and they “must take all reasonable steps to locate and provide the information asked for within any reasonable time periods requested”.
In any case, this is no later than four weeks after receiving the request. The FCA expects the product providers and third-party firms to have the necessary resources in place, including the ability to identify requests made under the scheme, before the scheme goes live, to be able to meet these obligations.
The FCA added: “There may also be cases where the Financial Ombudsman Service contacts you for information on behalf of an individual under the scheme. Where you receive information requests from the FSCS or the Financial Ombudsman Service, we expect you to cooperate with the request and respond in the same manner and within the same timelines as if the request had come from an advice firm.
“We will be monitoring the timeliness of firms in providing this information. We will consider taking action where we see evidence of material non-compliance with the rules. We will review a range of data sources. This includes the notifications that advice firms must provide of not receiving the information they require from third party firms within four weeks of asking.
“You should consider the contents of this letter and take any necessary action to ensure your firm complies with information requests from firms involved in the BSPS redress exercise, so that consumers achieve the outcomes they are entitled to.”
Redress scheme backlash
This all comes as the FCA faces a backlash over the BSPS redress scheme.
A group of pension advice firms launched a legal challenge against the FCA over the setup of the British Steel redress scheme.
The companies are part of the British Steel Action Group and are being advised by FS Law.
The FCA said its decision to set up the redress scheme is “appropriate” and it will “vigorously defend it”. The watchdog criticised the move and accused the firms of taking legal action to “delay the payment of redress”.
The regulator also warned former BSPS members that it has received reports of certain firms making unsolicited redress offers to steelworkers who have not made complaints. It added that four companies that are part of the British Steel Action Group that “may be” engaging with ex-BSPS members.