A total of £106m ($136m) has been offered so far to 1,870 former British Steel Pension Scheme (BSPS) members in the redress scheme to back those given faulty advice by pension advisers.

However, less money than expected has been paid out due to “changing economic conditions,” and, says the FCA, the “expected cost of funding a guaranteed retirement income through an annuity has fallen.”

It was originally estimated that £50m ($64m) was due to be paid by firms or Financial Services Compensation Scheme (FSCS), but ‘only’ £8.7m ($11.2m) has been.

“We understand some former BSPS members will be disappointed to have received no, or less, redress than they were expecting,” the watchdog said.

7,700 opted out

About 7,700 members decided to transfer out of the pension scheme after receiving advice when BSPS was restructured in 2017. The FCA later found almost half (46%) of the advice issued was unsuitable, and said that the “this poor conduct by some advisers caused significant harm and distress.“

But even though they received unsuitable advice, about 1,744 former members who sought compensation were not offered any redress payouts due to not having lost out when following advice to opting out.

In all, more than 6,500 former members have been supported in this matter by either the Financial Ombudsman Service, FSCS or via FCA’s redress scheme.

Not all affected members have sought redress. These numbers were also finalized at the end of April, and there are still over 200 claims to be worked through which could change the final redress sum.

FCA criticised

Even though many actions have been taken around this scandal, the FCA still faced received a number of complaints saying that its response was too slow, and that it failed to protect the steelworkers.

One of the complaints accused the FCA of being “behind the curve to respond to catastrophic impact on members,“ because the authority was made aware of the transfer issues at least in 2017. Therefore, the complainant said that it was “inexcusable that the FCA was not more prepared for this potential scandal.”

“This poor conduct by some advisers caused significant harm and distress.”

The FCA

To meet the criticism, a main decision letter was published and shared with complainants in April, which included how concerns were considered, and how actions were taken.

“Given the very clear public interest in this issue, and to support our accountability to the public and to Parliament, we have taken the unusual decision to publish our main decision letter so people can read for themselves how we reached the conclusions we have,” the FCA said.

“We have sought to learn lessons as a result of events relating to BSPS and accepted a number of recommendations made following the significant public scrutiny and independent reviews into BSPS.”

British Steel Pension Scheme actions

Since 2023, the FCA has taken enforcement actions against 15 firms and individuals in relation to the British Steel Pension Scheme, with sanctions totalling payments totalling £8.87m ($11m). The actions included:

• March 2024 – Inspirational Financial Management Ltd fined £897,840. Arthur Cobill, an adviser at IFM, and William Hofstetter, one of its directors, banned and fined £120,000 and £40,00.
• November 2023 – Two advisers banned and fined £26,800 and £40,888.
• November 2023 – A First Supervisory Notice with restrictions on KBFS Financial Limited.
• November 2023 – Person banned and fined £200,000.
• October 2023 – Two advisers and banned and fined £2,212,316 and £397,400.
• October 2023 – Pension transfer specialist and financial adviser banned and fined £158,600.
• September 2023 – Two advisers were banned and fined £70,000 and £85,606.
• September 2023 – Two former directors of CFP Management Ltd were banned and fined £681,536 and £632,594.
• July 2023 – Adviser banned and ordered to pay £850,000 in redress to clients.
• June 2023 – Adviser banned, and ordered to make a £106,000 payment to the Financial Services Compensation Scheme.
• June 2023 – Three more firms forced to reverse misleading pension offers.
• May 2023 – Adviser censured  over incorrect advice to British Steel pensioners.
• February 2023 – 15 more firms named in the row over the redress scheme.
• February 2023 – Two firms, Abbey Lane Financial Associates Limited and Estate Capital Financial Management Limited, forced to stop making deceptive offers to British Steel pensioners.
• January 2023 – Warning issued to firms over a ‘deliberate attempt to exclude’ pensioners from the compensation scheme.

Some bans and fines are being appealed.