The Financial Conduct Authority has warned that some firms could be involved in “malpractice” by making unsolicited offers to former British Steel Pension Scheme (BSPS) members who have not yet made complaints.
It said the moves could be an attempt to hand people less money.
The regulator has a redress scheme for former BSPS members who have not yet 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.
It said it has become aware of four firms associated with the British Steel Action Group contacting BSPS members with offers.
It said it believed the moves 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.
The FCA said: “If substantiated this is wholly unacceptable and constitutes serious malpractice.”
Some firms have told consumers that their redress would amount to zero if it is calculated in accordance with the FCA’s guidance. Preliminary evidence suggests that they are not following the guidance they are expected to follow when calculating redress.
The FCA said: “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.”
It said firms must treat customers fairly 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.
If any BSPS members accept an offer now it might mean they 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 established, provided they are eligible. Firms will then be required to use the FCA’s calculator when calculating redress if the advice was unsuitable.
Last month the FCA fined Pembrokeshire Mortgage Centre Limited (trading as County Financial Consultants) £2.35m for providing “woeful” and unsuitable advice to consumers to transfer out of the BSPS and other defined benefit pension schemes.
The FCA said it is continuing about 30 enforcement investigations into firms and individuals relating wholly or partly to BSPS advice. All cases are at a very advanced stage and some are in litigation.
Read more information about the British Steel pension redress scheme.
