About £49 million was paid to British Steel workers wrongly advised to move money out of their defined benefit pensions.
More than 1,000 people accept fees from their financial advisers under a redress system set by the Financial Conduct Authority (FCA), the City regulator. The typical payment expects to be about £45,000, according to a detail publish morning.
The financial controller has said the total pay-out to British Steel Pensions Scheme members impacted by a mis-selling humiliation is set more than £20 million less than previously expected.
The Financial Conduct Authority (FCA) told more than 1,000 former British Steel Pension Scheme partners are set to receive redress payments.
It said the bill to pay workers will now be around £49 million. In March, it estimates to cost slightly over £71 million.
The Financial Conduct Authority has set out plans to deliver £71.2mn in compensation to a former member British Steel Pension Scheme who received unsuitable advice to transfer out of their pension.
In a consultation paper published today (March 31), the FCA estimated that 1,400 steelworkers receive £71.2m in redress under the scheme.
Redress represents a transfer to BSPS members who received unsuitable pension transfer advice from the firms that provided that advice to the extent that they remain in business.
In today’s paper, the FCA said the proposed scheme covers those who transferred between May 26, 2016, and March 29, 2018.
Consumers are excluded from the scheme if they have already received redress, have referred their complaint to the Financial Ombudsman Service, have received an outcome from a suitability assessment on their case, are an insistent client, and received advice outside the relevant period.
The FCA said some BSPS members might have received transfer advice outside the relevant period covered by the proposed scheme that advice not included in the scope.
Customers who received advice outside the relevant period can make a complaint in the usual way if they think the advice they gave might have been unsuitable.
The FCA has found that almost half (46 percent) of the advice it reviewed relating to BSPS was unsuitable.
The City watchdog first announced its plans for a redress scheme in December and set out that it takes strong, action against impacted firms who try to avoid their obligations to pay compensation.
If the scheme goes ahead, the FCA will publish a rule setting out how advisers must determine whether they gave unsuitable advice and whether they must pay compensation.
Independent checks and monitoring are put in place to ensure that firms comply with the rules.
The scheme expects to be in place by early 2023, with individuals starting to receive compensation in late 2023.
The regulator said for those individuals who received advice from an insolvent business or one no longer exists, Financial Services Compensation Scheme will consider claims.
Sheldon Mills, administrative manager for consumers and competition at the FCA, said the circumstances around British Steel Pension Scheme transfers lived exceptional, with former members receiving significantly higher levels of unsuitable advice compared with other cases.
We like individuals who failed out financially by receiving unsuitable advice to receive compensation through our scheme.
The FCA said the scheme requires firms who advised certain BSPS members to transfer their safeguarded benefits to a DC scheme to assess whether the advice is suitable and to pay appropriate redress where the advice was not suitable.
The steps the proposed scheme will require firms to take can group into 3 main phases pre-scheme checks, suitability assessments, and assessment outcomes.