A sharp warning about “wholly unacceptable” unsolicited offers being made to former members of the British Steel pension scheme (BSPS) has been issued by the FCA. The regulator said: “We believe the actions by firms may be a deliberate attempt to exclude former members from participating in the scheme, binding them to receiving less money than they might be entitled to under the scheme.”

Last week, the regulator was hit with a legal action served by advisory firms under the umbrella of the British Steel Action Group. The court action challenged compensation awarded to former pension members who got unsuitable opt-out advice. The regulator suspects that four firms from that group have been contacting consumers and trying to stop them from entering the redress scheme.

“This is wholly unacceptable and constitutes serious malpractice.”

The FCA

“We are aware that certain firms are making unsolicited offers to former British Steel pension scheme (BSPS) members who have not made complaints,” the FCA said. “If substantiated this is wholly unacceptable and constitutes serious malpractice.”

The FCA alleges that some customers have been told, by these firms, that their redress would “amount to zero” if it is calculated in accordance with the FCA’s guidance. However, the regulator states that preliminary evidence suggests that the firms are not following the guidance when calculating. When the scheme was introduced in November 2022, the average payout was expected to be around £45,000 ($54,000).

The FCA says that it will urgently start looking into these cases, and could take action against any firm that is found to be misleading consumers or making offers not calculated in line with the set guidance. 

Financial advice

The FCA also warns that accepting an offer now might exclude former members from the scheme, and that they therefore might not receive the right amount of redress. 

Former members who decide not to take any action and not reply to any of the firms’ offers will be included in the FCA’s redress scheme, provided that they are eligible. Firms must then use the scheme’s calculator when calculating the redress.

Consumers can also ask the Financial Ombudsman Service to check if the firms have calculated the redress in accordance with the scheme rules.  

Those who receive offers before the scheme starts and are unsure about their options are also advised to contact the Financial Ombudsman Service. Former members who want to accept early offers are advised to obtain independent legal or financial advice before doing so.