The Financial Conduct Authority (FCA) has defended its British Steel Pension Scheme (BSPS) redress scheme, after a legal challenge was made by a number of pension advisory firms who are members of the British Steel Action Group.

The FCA said it viewed the legal challenge as an "attempt to delay the payment of redress that is due to some former BSPS members”, stressing that it is “confident” that its decision to set up the redress scheme and will “vigorously” defend it.

However, the FCA explained that in the “unlikely outcome” that the scheme is cancelled, the usual time limits for complaining and referring complaints to the Financial Ombudsman Service (FOS) will apply.

According to the FCA, this could risk former BSPS members who think they may have received poor advice to transfer out in 2016 or early 2017 being timed out from making a complaint.

As a result, the watchdog has urged former BSPS members who received advice before 30 April 2017 to complain now and refer their complaint to the FOS if they are unhappy with the firm's response.

Furthermore, the FCA said that if former BSPS members have already complained and are unhappy with firm’s response, they should refer the matter to the FOS within six months of the date of the response to ensure that they are not timed out if the scheme is cancelled.

The FCA stated: “We are confident that our decision to set up a redress scheme is appropriate and will vigorously defend it. In making our decision we considered extensive stakeholder feedback from the consultation process.

“If the legal action causes scheme timings to change we will let former BSPS members, firms and stakeholders know. In the meantime, firms should continue to prepare for the implementation of the scheme.”

Ahead of the implementation of the proposed redress scheme, the FCA has also been consulting on plans to extend its temporary BSPS asset retention rules, to help prevent firms seeking to avoid the cost of redress liabilities.

Under the proposed scheme, over 1,000 customers who received unsuitable defined benefit (DB) pension transfer advice are expected to receive redress, in an effort to put consumers back in the financial position they would have been in had they not transferred.

The FCA initially announced plans for the compensation scheme for former BSPS members in March 2022, after research from the FCA found that 47 per cent of the advice relating to the BSPS was unsuitable, with concerns also previously raised by the Public Accounts Committee and National Audit Office.

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