FCA warns against 'misleading' British Steel redress offers

The FCA says it has been made aware that several firms are making unsolicited offers to former British Steel pension scheme (BSPS) members who have not made complaints.

The regulator believes four firms who are associated with the British Steel Action Group may be engaged in this conduct.

The FCA recently introduced a redress scheme for former BSPS members who have not complained. Under the scheme firms will have to review the advice they gave and pay redress to those who lost money because of unsuitable advice.

However, its investigation found that some firms have told consumers that their redress would amount to zero if it is calculated in accordance with the FCA's guidance.

The FCA said: "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. If substantiated this is wholly unacceptable and constitutes serious malpractice.

"We are urgently looking into these cases and will consider taking action against any firm we find to be misleading consumers or making offers not calculated in line with our guidance."

Expectations for firms

The FCA says it expects firms to treat customers fairly and to clearly explain the implications of accepting an offer before the scheme starts.

If a former BSPS member has made a complaint to a firm and the firm decides that the advice was unsuitable, the firm should inform them that the redress methodology will change on 1 April 2023 and that they have the option to wait until then before the redress calculation is carried out.

Implications for former BSPS members

Accepting an offer now might mean former members are not included in the scheme and might mean they do not receive the right amount of redress.

If former members do not take any action and do not reply to the offer from the firm, they will be included in the redress scheme the FCA has established, provided they are eligible. Firms will then be required to use the FCA's calculator when calculating redress if the advice was unsuitable.

If consumers have their cases reviewed as part of the redress scheme, they can ask the Financial Ombudsman Service to check that the firm has calculated redress in accordance with the scheme rules.

Former members who receive offers before the scheme starts and are unsure about their options can contact the Financial Ombudsman Service free of charge.

The FCA added that former members who intend to accept offers before the scheme starts "may wish to consider obtaining independent legal or financial advice before doing so".