FCA looking into incorrect DB pension redress calculations

The Financial Conduct Authority (FCA) has confirmed that it is looking into a "small number of firms" that are not including all fees and charges in their defined benefit (DB) pension advice redress calculations, in line with current guidance.

The regulator revealed that it recently received information on this issue, which suggested that some firms are not considering ongoing fund costs and/or fully allowing for ongoing adviser charges in redress calculations.

According to the FCA, some of these firms may also be unfairly terminating consumer contracts after consumers make a complaint.

In a statement, the FCA said: "We are looking into these matters and where we identify firms not calculating redress correctly, we will take action using the full range of our powers which may include appointing an independent professional to check calculations and help consumers get the right redress.

"While we have only seen a small number of firms calculating redress incorrectly, we remind all firms undertaking calculations of the importance of allowing for fees and charges correctly.

"We have set out further detail to clarify how firms should calculate redress payments in our updated statement on pension transfers redress guidance. This is a complex area and firms need to take special care, given the potential for consumers not to receive the compensation they deserve."

The FCA also emphasised that this is "particularly important" for any firm calculating redress for former British Steel Pension Scheme (BSPS) members, ahead of a decision by the FCA Board on whether to implement a consumer redress scheme.

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