UK Inquiry Tracker

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

Treasury minutes: Government response to the Committee of Public Accounts on the Fourteenth report from Session 2022-23

21 Jul
2022

Report published

Fourteenth Report - Investigation into the British Steel Pension Scheme

13 Jun
2022

Oral evidence

British Steel Pensions Scheme; Regulation after EU Exit

13 Jun
2022

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

British Steel Pensions Scheme

23 May
2022

Correspondence

Correspondence from Nikhil Rathi, Chief Executive, FCA – Financial Conduct Authority, re 27 April - British Steel Pensions Scheme (BSPS) se…

27 Apr
2022

Oral evidence

British Steel Pension Scheme

27 Apr
2022

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

British Steel Pension Scheme

Oral evidence sessions 2 sessions

13 Jun 2022

View on parliament.uk

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

View on parliament.uk

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)

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Fourteenth Report - Investigation into the British Steel Pension…	HC 251	21 Jul 2022	23	Responded

Recommendations & Conclusions

3 results

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 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 themselves, but only 25% of BSPS members who received unsuitable advice have raised claims with redress organisations. Similarly, despite the redress process being free to use, 72% of complaints to the Financial Ombudsman and 40% of claims to FSCS being made through third party representatives such as claims management companies and solicitors. This points to the general complexity of the redress system and the FCA’s failure to recognise the specific vulnerabilities of BSPS members that prevent them from seeking compensation directly. For redress arrangements to work effectively firms should have PII cover to afford the cost of compensation, however many advice firms are unable to access the insurance and, since 2018, 60% of firms have left the DB pension transfer market entirely. For firms that have entered insolvency, compensation is funded by an FSCS levy, which forces compliant firms to shoulder the cost of unsuitable advice. Given that the Financial Ombudsman is dealing with a significant backlog of complaints and the FSCS levy is forecast to increase to £406 million in 2022–23, the redress system may not have the capacity to respond to further instances of significant consumer detriment within financial services. Recommendation: The FCA, FOS and FSCS should write to the committee in 6 months to explain what they are doing to manage risks in the redress system for financial service. The FCA’s handling of the wider DB pension market should be reviewed as there could be thousands more cases of mis-selling which may be eligible 8 Investigation into the British Steel Pension Scheme for financial redress, given the significant amount of unsuitable advice seen across the sector. The review should include consideratio Show less

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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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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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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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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