The UK financial regulator is set to prepare a consultation on a redress scheme for former members of the British Steel Pension Scheme (BSPS) who transferred their pension.

The Financial Conduct Authority’s board has asked for the consultation to be prepared, and subject to final approval of the consultation documents, the FCA expects to consult by the end of March 2022.

Under a restructuring in 2018, many members were advised to transfer their assets from BSPS’s defined benefit scheme into a personal pension. The FCA said its analysis indicated significantly more unsuitable advice than observed in reviews of higher risk firms in non-BSPS cases.

In a letter to firms who gave advice to BSPS members between March 2017 and March 2018, the FCA said under a redress scheme they would be required to review their advice. If it was unsuitable and resulted in financial loss for BSPS members, the firms would be required to provide compensation.

It warned firms to retain assets for a potential redress exercise and not enter arrangements to remove assets from the business in anticipation of regulatory action or insolvency.

The FCA also said that firms should not apply to cancel their authorisation without first discussing their plans with the regulator.

“They should also not apply unless they can demonstrate that they have assessed any relevant British Steel Pension Scheme-related liabilities and that the firm has sufficient financial and non-financial resources to cover them,” the FCA said.

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