The Financial Conduct Authority's (FCA) British Steel Pension Scheme (BSPS) redress scheme paid out a total of £8.7m to 360 former BSPS members, after "changing economic conditions" pushed the amount of redress down from the £50m initially estimated.

The FCA's report, published as the redress scheme draws to a close, confirmed that a total of £106m was offered to 1,870 former BSPS members to put them back in the position they would have been at retirement.

This included £69.7m in pre-scheme redress from Financial Services Compensation Scheme (FSCS) claims, £19.3m from the FCA’s skilled persons review, £8.4m from the Financial Ombudsman Service (FOS) complaints, as well as the £8.7m from the FCA’s redress scheme.

In particular, the FCA's redress scheme resulted in 187 members offered redress by firms totalling £3.8m, while 173 were offered redress by FSCS totalling £5m.

However, the FCA estimated that 1,744 former members received unsuitable advice but were not offered a redress payment, as, even though they received unsuitable advice, they haven't lost out financially as a result.

Indeed, the FCA confirmed that, since 2022, the proportion of individuals who received unsuitable advice to transfer but didn't receive a redress payment increased significantly since the redress scheme was announced, due to "changing economic conditions".

Redress for the scheme was calculated based on the money needed to top up a personal pension, to buy an annuity at retirement that provides an income similar to what the person would have received had they stayed in the BSPS.

However, the expected cost of funding a guaranteed retirement income through an annuity has fallen since the FCA first introduced the redress scheme, meaning that the amount needed to top up a defined contribution pot to put someone back in the position they would have been in if they hadn’t received unsuitable advice, is likely to be less and in some cases zero.

However, the FCA acknowledged that some former BSPS members will be disappointed to have received no, or less, redress than they were expecting.

Indeed, Broadstone head of redress, Brian Nimmo, said that “many ex-British Steel Pension Scheme members will have entered the redress scheme with expectations of receiving life changing amounts of compensation”, agreeing that “it is unsurprising that they will have been left bitterly disappointed if they received nothing at all”.

“There is a glaring disparity of outcomes depending on when each individual was assessed for loss with those waiting for the FCA’s redress scheme typically receiving far less compensation than those who received compensation earlier,” he continued.

“Average compensation for those who received it before the FCA’s redress scheme started was over £60,000 whereas for those assessed in the redress scheme, only 360 received any compensation and over 1,700 who had their advice assessed as unsuitable, received no compensation at all.

"As early as July 2022, it was clear that the changing market conditions meant that redress levels were falling drastically.

“It highlights the importance of keeping consumers informed and up to date with the latest developments as expectations could have been better managed throughout this process.

"That so many consumers will be potentially disappointed with the outcome risks undermining the laudable aims the redress scheme set out to achieve.”

In addition to member redress, the FCA's report confirmed that work to pursue those who caused "significant" harm through poor financial advice has continued, with 15 individuals banned from working in financial services or holding a specific role.

Before the scheme started, the FCA also made emergency rules to stop firms stripping assets to avoid paying redress.

The FCA also acted against firms making unsolicited offers in an attempt to exclude former BSPS members from the scheme and reduce their potential redress liabilities.

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