British Steel Pension Scheme

Public Accounts Committee Closed Inquiry
Opened: 15 Mar 2022 Closed: 14 Oct 2022 Parliament page
When the British Steel Pension Scheme (BSPS) was restructured in 2017, its members were given a set of options for what to do with their pension “pot”, including transferring their funds out of the pension scheme altogether. Around 7,700 members, many of whom received independent financial advice to inform their … Read more
5 Recommendations
18 Conclusions
1 Report
2 Oral sessions
1 Letter
2 Events
Activity timeline 7 events
14 Oct
2022
Report published
21 Jul
2022
Report published
13 Jun
2022
Oral evidence
13 Jun
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
23 May
2022
Correspondence
27 Apr
2022
Oral evidence
27 Apr
2022
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 2 sessions
13 Jun 2022
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British Steel Pensions Scheme; Regulation after EU Exit
Andrew Bailey · Bank of England Emily Miles · Department for Environment Food and Rural Affairs Michael Grenfell · Competition and Markets Authority Sarah Albon · Health and Safety Executive
27 Apr 2022
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British Steel Pension Scheme
Caroline Rainbird · Financial Services Compensation Scheme (FSCS) Nausicaa Delfas · Financial Ombudsmen Service Nikhil Rathi · Financial Conduct Authority Philippa Hann · Clarke Willmott LLP Rich Caddy · British Steel Pension Scheme Sheldon Mills · Financial Conduct Authority Tim Fassam · Personal Investment Management and Financial Advice Association (PIMFA)
Title HC No. Published Items Response
Fourteenth Report - Investigation into the British Steel Pension… HC 251 21 Jul 2022 23 Responded
Recommendations & Conclusions
23 results
2 Recommendation Acknowledged
Fourteenth Report - Investigation …
The Financial Conduct Authority has consistently been behind the curve in responding to the catastrophic...
The Financial Conduct Authority has consistently been behind the curve in responding to the catastrophic impact on British Steel Pension Scheme members. The FCA has been slow to respond at all stages of the BSPS case, for example it failed … Read more
Government Response
The FCA acknowledges that there are lessons to learn, but is concerned that the report does not fully acknowledge the ways the FCA has responded since 2017. The FCA will provide updates in line with the Committee’s recommendations and a response to some of the wider conclusions of the report in a letter dated 22 September 2022.
HM Treasury
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3 Recommendation Accepted in Part
Fourteenth Report - Investigation …
The Financial Conduct Authority has not been sufficiently proactive or timely in using its enforcement...
The Financial Conduct Authority has not been sufficiently proactive or timely in using its enforcement powers. To date, the FCA has issued one fine in response to the BSPS case, and while it has 30 more enforcement actions in place, … Read more
Government Response
The FCA will provide a high-level update on enforcement activity and the Treasury outlined existing mechanisms to address activity outside the FCA's perimeter, but did not commit to specific changes to enforcement powers or the regulatory perimeter.
HM Treasury
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4 Recommendation Acknowledged
Fourteenth Report - Investigation …
The way that compensation has been provided in the British Steel Pension Scheme case has...
The way that compensation has been provided in the British Steel Pension Scheme case has been slow and unfair. BSPS members face significant delays in receiving compensation. Complaints made to the Financial Ombudsman Service take on average eight months to … Read more
Government Response
The FCA has considered how further redress mechanisms can be implemented more quickly and provide fair compensation and its plans to improve the redress framework is in the FCA Business Plan for 2022/23, but it does not offer specific changes to resolve differences in compensation levels.
HM Treasury
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5 Recommendation Accepted
Fourteenth Report - Investigation …
Seven years after the Pensions Schemes Act, regulated bodies are still not clear on the...
Seven years after the Pensions Schemes Act, regulated bodies are still not clear on the Financial Conduct Authority’s expectations for consumer protection. The 2015 Pensions Schemes Act provided consumers with greater flexibility for Investigation into the British Steel Pension Scheme … Read more
Government Response
The FCA agrees with the Committee’s recommendation to be more proactive and consumer-focused in its engagement with stakeholders. The FCA’s Business Plan sets out its commitments for tackling conduct that can cause serious harm and how the organization is joining up its tools to act efficiently, effectively, and consistently. On BSPS, working in partnership with the FOS and the FSCS, the FCA has engaged extensively with former BSPS members over a significant period of time.
HM Treasury
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6 Recommendation Rejected
Fourteenth Report - Investigation …
The current compensation arrangements do not always protect consumers, can create wider costs to firms...
The current compensation arrangements do not always protect consumers, can create wider costs to firms and may not have the capacity to cope with future risks in the advice market. The standard approach to redress relies on consumers seeking compensation … Read more
Government Response
The FCA, FOS and FSCS will write to the committee on 21 January 2023 to explain what they are doing to manage risks in the redress system for financial service; the FCA disagrees with the recommendation to review its handling of the wider DB transfer market.
HM Treasury
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1 Conclusion Acknowledged
Fourteenth Report - Investigation …
On the basis of a report by the Comptroller and Auditor General, on 27 April...
On the basis of a report by the Comptroller and Auditor General, on 27 April 2022 we took evidence from the Financial Conduct Authority (FCA), the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) on the British … Read more
Government Response
The government acknowledges the Committee's report and states it is the FCA’s response to the Committee’s report.
HM Treasury
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7 Conclusion Acknowledged
Fourteenth Report - Investigation …
The impact on members has been catastrophic, both financially and emotionally.15 Alongside losses caused by...
The impact on members has been catastrophic, both financially and emotionally.15 Alongside losses caused by unsuitable advice to transfer, many members face ongoing advice charges to manage their remining pension savings.16 The FCA is unaware of the total financial loss … Read more
Government Response
The FCA acknowledges the catastrophic impact on members and shares concerns about unsuitable advice, referencing meetings with steelworkers and the consultation paper CP 22/6.
HM Treasury
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8 Conclusion Acknowledged
Fourteenth Report - Investigation …
The FCA failed to take swift and effective action at all stages of the BSPS...
The FCA failed to take swift and effective action at all stages of the BSPS case. It first became aware of the risks of unsuitable transfer advice in 2015 after the introduction of the Pensions Schemes Act but failed to … Read more
Government Response
The FCA acknowledges that it failed to take swift and effective action at all stages of the BSPS case and shares concerns about unsuitable advice, referencing meetings with steelworkers and the consultation paper CP 22/6.
HM Treasury
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9 Conclusion Acknowledged
Fourteenth Report - Investigation …
The former Chief Executive of the FCA told us that, as the BSPS case unfolded,...
The former Chief Executive of the FCA told us that, as the BSPS case unfolded, the FCA did not have the data to tell it which firms had provided advice to members and found it difficult accessing this information when … Read more
Government Response
The FCA agrees with the committee's recommendation and shares concerns about unsuitable advice, referencing meetings with steelworkers and the consultation paper CP 22/6.
HM Treasury
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10 Conclusion Acknowledged
Fourteenth Report - Investigation …
In response to the BSPS case, the FCA had to gather further evidence to understand...
In response to the BSPS case, the FCA had to gather further evidence to understand the scale of the problem and in June 2018, out of a sample of 192 files, it found that 47% of transfer recommendations were unsuitable.25 … Read more
Government Response
The FCA provided a high-level update on enforcement activity related to BSPS, stating it is a high priority and investigations are at an advanced stage.
HM Treasury
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11 Conclusion Acknowledged
Fourteenth Report - Investigation …
The FCA implemented ineffective regulatory interventions in its initial response to the BSPS case.
The FCA implemented ineffective regulatory interventions in its initial response to the BSPS case. For example, the FCA issued letters to advice firms reminding them of their obligations to provide advice that is in consumers’ best interests, showing its naivety … Read more
Government Response
Intervention work carried out by the FCA has also led to 48 firms withdrawing from the defined benefit pension transfer advice market. Interventions made by the FCA have required firms to cease all regulated activities relating to DB pension transfers and have stopped firms providing DB pension transfer advice to BSPS customers.
HM Treasury
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12 Conclusion Acknowledged
Fourteenth Report - Investigation …
To date, the FCA has only issued one fine in response to the BSPS case.36...
To date, the FCA has only issued one fine in response to the BSPS case.36 It told us that it is working on a further 30 enforcement cases, but despite working as “swiftly 22 Qq 37, 38 (27 April) 23 … Read more
Government Response
The FCA is able to provide a high-level update on enforcement activity related to BSPS, stating that enforcement activity related to BSPS is a high priority. The FCA currently has c.30 ongoing investigations into firms and individuals relating wholly or partly to BSPS advice and five of them have entered either Stage 1 settlement discussions or the Regulatory Decisions Committee.
HM Treasury
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13 Conclusion Rejected
Fourteenth Report - Investigation …
Alongside the unsuitable advice provided by firms, there have been other issues of non-compliance within...
Alongside the unsuitable advice provided by firms, there have been other issues of non-compliance within the BSPS case, including unregulated introducers and phoenixing. The FCA has identified that in 30% of BSPS cases members were introduced to their adviser by … Read more
Government Response
The government disagrees with the Committee’s recommendation but welcomes the Committee’s view on the need for effective mechanisms to consider and, where appropriate, address concerns about activity that is not within the FCA's regulatory perimeter. The government has concluded that, on balance, the key mechanisms that currently exist are appropriate to address the types of concern highlighted by the Committee.
HM Treasury
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14 Conclusion Acknowledged
Fourteenth Report - Investigation …
The FCA oversees the consumer redress process which intends to put consumers back into the...
The FCA oversees the consumer redress process which intends to put consumers back into the financial position they would have been in if unsuitable advice had not been given.45 Consumers must raise complaints directly with advice firms or the FOS … Read more
Government Response
The FCA has considered how further redress mechanisms can be implemented more quickly and provide fair compensation. The FCA Business Plan for 2022/23 sets out its plans to improve the redress framework, including carrying out redress exercises with firms where appropriate, so they can quickly remedy harm.
HM Treasury
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15 Conclusion Acknowledged
Fourteenth Report - Investigation …
The FCA provides guidance on how compensation should be calculated and sets the rules for...
The FCA provides guidance on how compensation should be calculated and sets the rules for how compensation is delivered. Calculations use complex financial assumptions which are updated every three months in accordance with market performance, and therefore are subject to … Read more
Government Response
The FCA states it will consider the Committee's feedback as part of its wider response to the BSPS redress consultation. The FCA explains its redress calculation methodology is designed to respond to changes in financial markets and produce an appropriate redress figure at the point at which the redress is calculated.
HM Treasury
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16 Conclusion Acknowledged
Fourteenth Report - Investigation …
Many BSPS members have not received the full amount of compensation owed to them due...
Many BSPS members have not received the full amount of compensation owed to them due their advisers being unable to pay compensation. The FCA imposes limits on the compensation awarded by both FOS and FSCS, and the FSCS’s compensation limits … Read more
Government Response
The FCA states it will consider the Committee's feedback as part of its wider response to the BSPS redress consultation. The FCA explains its redress calculation methodology is designed to respond to changes in financial markets and produce an appropriate redress figure at the point at which the redress is calculated.
HM Treasury
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17 Conclusion Acknowledged
Fourteenth Report - Investigation …
The FCA and redress organisations worked to engage with and encourage BSPS members to seek...
The FCA and redress organisations worked to engage with and encourage BSPS members to seek compensation through direct letters and in-person events.54 Despite these efforts only 25% of all members who received unsuitable advice have raised claims with redress organisations, … Read more
Government Response
The FCA agrees with the committee's recommendation and describes its Business Plan commitments and engagement efforts with BSPS members and other consumer engagement methods.
HM Treasury
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18 Conclusion Rejected
Fourteenth Report - Investigation …
The FCA’s response to the BSPS case highlights wider issues within its regulatory approach.
The FCA’s response to the BSPS case highlights wider issues within its regulatory approach. Alongside the estimated 369 firms and advisers that provided unsuitable advice to BSPS members, the FCA found that 17% of DB transfer advice was unsuitable within … Read more
Government Response
The FCA disagrees with the Committee’s recommendation and does not consider that a review of how it is handling the wider DB transfer market should be undertaken, stating that the harm associated with BSPS is unique and not replicated elsewhere.
HM Treasury
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19 Conclusion Not Addressed
Fourteenth Report - Investigation …
There is a fundamental misalignment between legislation and regulation of the DB pensions advice market,...
There is a fundamental misalignment between legislation and regulation of the DB pensions advice market, which has caused confusion over the suitability of transfer advice.60 The 2015 Pensions Schemes Act introduced by HM Treasury was intended to provide greater freedom … Read more
Government Response
Seven years after the Pensions Schemes Act, regulated bodies are still not clear on the Financial Conduct Authority’s expectations for consumer protection.
HM Treasury
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20 Conclusion Acknowledged
Fourteenth Report - Investigation …
In direct response to the 2015 Act, the FCA announced a new starting position for...
In direct response to the 2015 Act, the FCA announced a new starting position for advisers who should assume that in most cases a transfer will be unsuitable.63 Subsequently in 2017, the FCA sought to align itself with the government’s … Read more
Government Response
The FCA removed the starting position rule in October 2020, has found a deterioration in the quality of advice, and published CP22/6 which if implemented would require firms to review their advice and pay redress to consumers where that advice was unsuitable, and will publish a Policy Statement on this later in 2022.
HM Treasury
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21 Conclusion Deferred
Fourteenth Report - Investigation …
There are also wider uncertainties within the advice market, including the provision of Professional Indemnity...
There are also wider uncertainties within the advice market, including the provision of Professional Indemnity Insurance (PII). PIMFA told us that the availability of PII has become severely limited because insurers are struggling to accurately predict the risk of 58 … Read more
Government Response
The FCA, FOS and FSCS will write to the committee on 21 January 2023 to explain what they are doing to manage risks in the redress system for financial service.
HM Treasury
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22 Conclusion Acknowledged
Fourteenth Report - Investigation …
The standard complaints-based approach to redress, which relies on consumers seeking compensation themselves, has proved...
The standard complaints-based approach to redress, which relies on consumers seeking compensation themselves, has proved ineffective in the BSPS case. Only 25% of members who received unsuitable advice have raised a claim with redress organisations.69 The FCA told us that … Read more
Government Response
The FCA agrees with the committee's recommendation and describes its Business Plan commitments and engagement efforts with BSPS members and other consumer engagement methods.
HM Treasury
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23 Conclusion Not Addressed
Fourteenth Report - Investigation …
Redress arrangements also impact on the wider pension’s advice market.
Redress arrangements also impact on the wider pension’s advice market. Firms should have PII cover to afford the cost of compensation, and whilst firms had cover when they provided advice, many are unable to access insurance for subsequent years.72 This … Read more
Government Response
The Government restates the committee's conclusion regarding PII cover and the FSCS levy.
HM Treasury
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Government Response AI assessment · 23 of 5 classified
Accepted 1
Accepted in Part 1
Acknowledged 15
Deferred 1
Not Addressed 2
Rejected 3
Total 5 recs + 18 conclusions
Correspondence 1 letter
23 May 2022 Correspondence from Nikhil Rathi, Chief Executive, FCA – Financial Conduct Authority, re 27 April - British Steel Pensions Scheme (BSPS) session, dated 18 May 2022
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