New emergency asset retention rules from the Financial Conduct Authority (FCA) have been applied to 101 firms who provided pension transfer advice for former British Steel Pension Scheme (BSPS) members.
The rules prevent firms who advised BSPS members from disposing of assets to avoid paying compensation.
Of the 101 firms, 26 firms have become subject to an FCA asset restriction.
The emergency rules came into force on 27 April and will continue to 31 January 2023.
The FCA said the emergency rules increase the likelihood that BSPS members will get compensation directly from the firms that advised them rather than the costs being borne by other Financial Planning firms paying the Financial Services Compensation Scheme (FSCS) levy.
Firms are not under the scope of the new emergency rules if they are:
- Unlimited partnerships
- Sole traders
- Already subject to similar restrictions
- Duel regulated by the Prudential Regulation Authority
- Subject to an insolvency order
- Or provided advice to fewer than five BSPS members.
An initial financial resilience statement has been completed by all 101 firms within the scope of the new rules. Of these 26 failed the assessment and are no subject to an asset restriction.
Firms must continue to complete the financial resilience statement each month or immediately following any material change in their financial circumstances.
Earlier this month the FCA warned that its proposed redress scheme for the British Steel Pension Scheme (BSPS) scandal could see advice firms pay over £140m in compensation.
Over £70m has already been paid out to BSPS members in compensation.
The BSPS redress scheme will generally follow the same methodology as all DB transfer cases, but the regulator has adapted some elements to reflect the particular circumstances of the BSPS scheme.
The regulator has also proposed setting up a redress calculator to help make calculations more consistent, ensure BSPS members receive “fair and quick” redress, and to reduce the overall cost of calculations to advice firms.
The regulator will publish changes to its general approach and how it will implement the proposed BSPS consumer redress scheme this winter.
It expects the BSPS redress scheme to come into force at the start of next year, with members who are eligible to receive compensation later in 2023 or early in 2024.
In 2017, many British Steel workers were advised to transfer out of their defined benefit pension into a defined contribution pension, typically a personal pension or a Self-Invested Personal Pension (SIPP). The scandal has attracted national attention and criticism.
By transferring to a private pension arrangement, the BSPS victims would have potentially lost benefits already built up in the British Steel Pension Scheme.
