The Financial Conduct Authority (FCA) has been urged to reconsider plans for assessing the amount of compensation owed to British Steel Pension Scheme (BSPS) members.

The regulator previously announced plans for a compensation scheme worth £71.2m for former members of the BSPS who received unsuitable advice to transfer out of the scheme.

However, the Personal Finance Society (PFS) has called on the FCA to reconsider its plan to mandate compensation in the form of a lump sum, as it said such compensation does not address the “central issue” of BSPS members giving up a guaranteed income.

In addition to this, it suggested that the Department for Work and Pensions (DWP) and the Pension Protection Fund (PPF) should work together to ensure clients are re-admitted to the BSPS or admitted to the PPF.

The PFS also raised concerns over the proposed Defined Benefit (DB) Advice Assessment Tool process, arguing that where this is not adequate to address the individual circumstances of a case, advisers should have a right of appeal to an independent, qualified transfer specialist that requires a review of the full file and the specific circumstances involved.

To support this, the PFS has shared information with the FCA about cases where advisers were told by the BSPS that early retirement options could be not be issued as their client was not old enough.

Such cases were highlighted as evidence of how the regulator’s assessment tool process is not sophisticated enough to establish a full picture of what could have been reasonably expected from financial advisers working with limited information, rather than the full facts in individual cases.

Furthermore, the PFS pointed out that those using the tool only received around two days of training, compared to the around 13 weeks of training required to become qualified as a pension transfer specialist.

In light of this, the society has also recommended that the FCA amend the timetable to provide for circumstances where advisers had good reason not to seek information on conversion rates.

PFS director of policy and public affairs, Matthew Connel, commented: “We accept that there were very poor practices among some firms involved in giving advice to BSPS members.

"However, the FCA research shows that good advice was also given, which means the review must be fair, proportionate, and operate on a case-by-case basis.

“Given that so much of the detriment that applies to BSPS members relates to a loss of guaranteed income, we do not think it is right for the compensation scheme to mandate those who received poor advice only receive a lump sum.

“The regulator needs to rethink their approach and work with the DWP, The Pensions Regulator plus the PPF to ensure British Steel workers retirements are put back in the financial position they would have been in if they were not advised to transfer out of the BSPS.”

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