It said: ‘We note that there are arguments that the FCA could have identified earlier than April 2021 that the complaints-led approach was not working to the extent needed (particularly because of the relatively low number of complaints) and responded by diverting more resource to gather the high level of evidence required to enable it to implement a statutory redress scheme.
“However, the complaints-led approach, combined with the joint supervisory and enforcement work in Phase 4, was considered the quickest and most efficient way for BSPS members to access redress, especially given the time and cost required to gather the high level of evidence required to meet the tests under s.404 and to implement a statutory redress scheme.”
The City watchdog also did not agreed that it failed to take steps to secure an appropriate degree of protection for consumers.
PII controls
It said the FCA cannot control the PII market by forcing insurers to provide cover or to do so at reduced cost.
It explained that it was likely that a volume of complaints at an earlier stage would have expedited the changes and the hardening of the PII market sooner.
“This would have essentially limited cover for DB pension transfers, particularly for advice relating to BSPS, as well as premiums becoming prohibitively expensive, rendering firms unable to afford cover,” the FCA added.
The regulator also believed its enforcement action was timely saying that it had to carry out “significant work” to build an evidence base to be able to open more than 30 enforcement investigations against firms and individuals.
With regards to compensation, the FCA said redress calculations are complex and individual and therefore result in people receiving different sums of money.
“This difference is a result of individual circumstances, when the calculation is made, market fluctuations, changes in the future expected economic environment (future investment returns, inflation rates), changes in mortality rates, the changing cost of annuities (which in turn will depend on the current and expected future economic environment and other factors) and differences in the historical investment performance of the DC schemes into which the transfer values from the BSPS were paid,” the FCA said.
The complainants are now able to pass their complaint on to the Complaints Commissioner.
In 2023, two Labour MPs also wrote to the financial regulator’s complaints commissioner about the Financial Conduct Authority’s performance, specifically around the handling of the British Steel Pension Scheme.
