The British Steel Adviser Group (BSAG) has dropped the legal challenge to the FCA it tabled in January. The action was believed to be an attempt to delay the payment of redress to former British Steel Pension (BSPS) members.

In its response to the challenge, the regulator said it would always stand by the scheme, and warned it would take action against BSAG firms that were making unsolicited offers to former BSPS members. “Our view all along has been that the challenge was without merit and that we would vigorously defend the scheme,” said the FCA. 

“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”, it added.

Redress scheme

The FCA laid out the redress scheme in November last year, and has since then received multiple challenges against it. In January, FCA directed a sharp warning on “wholly unacceptable” unsolicited offers that were being made to former BSPS members. A few weeks later, the regulator found that 15 more firms had been making these offers. Later in February, the regulator formally required two firms, Abbey Lane and Estate Capital, to stop making deceptive offers to former BSPS members.

“We are concerned that these unsolicited settlement offers, which are likely to be for less money than they are entitled to under the redress scheme, are a deliberate attempt to exclude former BSPS members from the redress scheme,” the FCA said then.

The FCA also fined Pembrokeshire Mortgage Centre Limited (trading as County Financial Consultants) £2,354,331 ($2,876m) in December, for giving unsuitable advice to consumers to transfer out of BSPS and DB pension schemes.

This redress scheme is intended for former British Steel Pension members who received unsuitable advice to transfer out of their pension scheme between May 26, 2016 and March 29, 2018. Over 1,000 former members are believed to be affected by that guidance, and the FCA expects the average payout to be around £45,000 ($54,000).

Attempted bluff

Solicitor and pensions expert Julian Richards, a partner at JMW Solicitors, said: “I don’t think it was ever a real challenge, more of a publicity raising issue by the IFAs, many of whom caused the mess in the first place. I think they were trying to bluff the FCA, but blinked first.”

But he said the redress scheme “doesn’t properly take account of the unprecedented volatility in financial markets recently which has led to former BSPS members with similar circumstances getting vastly different amounts of compensation.

“Plus, it excludes those who followed FCA advice and pursued their IFA for bad advice and got an offer of compensation. They could potentially be penalised for doing the right thing.”