WPC seeks further clarification from FCA on BSPS redress

The Work and Pensions Committee (WPC) has written to Financial Conduct Authority (FCA) executive director, Sheldon Mills, seeking clarification on the proposed British Steel Pension Scheme (BSPS) redress scheme.

In the letter, WPC chair, Stephen Timms, asked Mills to confirm whether the FCA intends to exclude people who have already received Financial Service Compensation Scheme (FSCS) compensation from the BSPS redress scheme.

In particular, Timms challenged Mills over his proposal that people who had “already received redress in full and final settlement claims about unsuitable advice during the relevant period will not be covered by the scheme”.

Timms acknowledged FCA’s rationale that “the harm they suffered has already been put right” but pointed to the findings of the National Audit Office which discovered that BSPS members had “lost £18m of redress” because the compensation awarded by the FSCS had been capped.

In addition to this, he pointed out that the average loss for BSPS claims resolved by FSCS was £82,600, with individual cases ranging from £0 up to £489,000.

The letter also challenged the FCA’s guidance stating that payments from the BSPS redress scheme should be made in the form of a lump sum to the customer due to the practical limitations of alternatives such as augmenting their personal pension.

However, Timms pointed out that the redress guidance states that a lump sum payment should be adjusted to take account of the individual’s tax position and their “wider circumstances so that they are not disadvantaged by receiving the redress payment.

In light of this, Timms asked the FCA to provide further information on how this should work in practice, querying how a lump sum payment could be adjusted to ensure that someone on means-tested benefits is not disadvantaged, for instance.

He also asked to know what steps the FCA will be taking to ensure that firms calculate and pay redress in accordance with their guidance.

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