The Financial Conduct Authority (FCA) has used emergency powers to introduce new rules, without consultation, to prevent financial advice firms that advised members of the British Steel Pension Scheme (BSPS) from disposing of assets to avoid paying compensation.

The temporary measures, effective from 27 April 2022, will apply to all firms that advised five or more former BSPS members to transfer out of the pension scheme between 26 May 2016 and 29 March 2018.

Under the requirements, in-scope firms will have to report to the FCA whether they can meet the potential cost of the BSPS redress, and will have to comply with the asset restriction rules until they can confirm that they have sufficient resources to pay their potential redress bill.

However, the regulator also confirmed that if the BSPS proposed redress scheme is introduced, it may later consult on extending the asset retention until firms have paid all the compensation owed.

Plans for a potential compensation scheme worth £71.2m for former members of the BSPS are currently under consultation, after research suggested that around 47 per cent per cent of the advice relating to the scheme was unsuitable.

The FCA also already placed limits on two former BSPS advisers following concerns they did not have adequate resources, explaining that it took advantage of the emergency powers in light of the risk that some firms will take steps to get rid of their assets if the rules were consulted on first.

FCA executive director of consumers and competition, Sheldon Mills, commented: “Firms who gave poor advice to British steelworkers must ensure that they retain assets and funds to pay redress under our proposed scheme.

"We are using these emergency powers today to prevent firms from avoiding paying any redress that is due to their customers and to help reduce the potential burden on the Financial Services Compensation Scheme.

"We will act swiftly if the rules aren’t being followed."

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