The Financial Conduct Authority has dismissed a year-old complaint that it failed to act and was not prepared enough to handle the British Steel Pension Scheme scandal.
In a letter, seen by FT Adviser, the FCA responded to a complaint to its chief executive Nikhil Rathi.
The complaint had been brought on behalf of 354 members of the British Steel Pension Scheme by law firm Clarke Willmot back in January 2023.
As part of the complaint, it was alleged that the FCA had been “consistently behind the curve” in responding to the “catastrophic impact on members of the BSPS”.
The complainants said the FCA became aware of the issues surrounding BSPS transfers in at least late 2017 during the time approximately 44,000 steelworkers were being asked to make life-changing decisions about their pension.
The complainants said it was “inexcusable” that the FCA was not more prepared for this potential scandal.
They also said the FCA failed to take steps to protect consumers.
This accusation included not taking steps to preserve advisers' professional indemnity insurance, which would have been available to consumers had the firms notified relevant parties of the existence of any complaints.
They also said the FCA did not prevent firms who had been identified as a risk to the BSPS members - and which gave up their DB transfer permissions as a result of investigation by the FCA - from passing on their clients to other unsuitable advisers.
The complainants also believed the FCA was not “sufficiently proactive or timely in using its enforcement powers”.
Finally they said the FCA’s actions had resulted in inconsistent outcomes for consumers entitled to compensation.
They therefore asked the FCA to make ex-gratia payments to those affected and to pay compensation for losses suffered where you believe that the FCA was the primary cause of the loss.
But the FCA said, following a detailed investigation, it has not upheld these allegations.
However, it did agree to pay each person £150 to acknowledge how long it has taken to respond.
The FCA’s view
With regards to the allegations that it was “behind the curve’, the regulator said it had expended significant time and resource in relation to pensions advice following the introduction of pension freedoms in 2015.
It added that it was not involved in the restructure of the BSPS and, without a clear information sharing arrangement with TPR, relied on intelligence from other sources.
It stated: “Further, as highlighted by the various independent reviews, the circumstances were unique and the timescale was very short for members to determine which option to choose.
“Given this short timescale, and the fact that the FCA did not have timely knowledge, the FCA could not have reasonably prevented the harm from occurring.”
It said once it became aware of the rate of unsuitable advice, particularly in the case of BSPS, it consulted on a redress scheme.
