101 former BSPS advisers in scope of FCA emergency asset retention rules

A total of 101 firms that provided pension transfer advice to former British Steel Pension Scheme (BSPS) members are in the scope of emergency asset retention rules, the Financial Conduct Authority (FCA) has revealed.

The FCA used emergency powers in April 2022 to introduce new rules, without consultation, to prevent financial advice firms that advised members of the BSPS from disposing of assets to avoid paying compensation.

The rules, which came into force on 27 April and will continue until 31 January 2023, apply to firms who provided pension transfer advice between 26 May 2016 to 29 March 2018, unless they are specifically excluded.

Under the requirements, firms had until 27 May 2022 to complete an initial financial resilience assessment (FRA) to establish whether they had sufficient financial resources to meet the potential costs of the BSPS redress.

The FCA has now confirmed that an initial FRA was completed by all 101 in scope firms and, as of August, 26 of these firms confirmed they failed the assessment and so are subject to an asset restriction.

The FCA said that the emergency rules “increase the likelihood that former BSPS members will get compensation directly from firms for any losses they suffered from being given unsuitable pension transfer advice.”

The regulator also confirmed that it will continue "actively monitoring" the financial stability of firms who gave advice to BSPS members, having previously outlined its expectations for those firms impacted in a Dear CEO letter in March 2022.

The FCA previously consulted on plans for a compensation scheme worth £71.2m for former members of the BSPS, with a consultation on the methodology used to calculate redress for consumers who suffered financial loss from transferring following non-compliant advice currently underway.

The regulator has faced continued scrutiny for its handling of the BSPS, with a recent report from the Public Accounts Committee suggesting that the FCA was “consistently behind the curve” in responding to unsuitable pension transfer advice.

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