British Steel Pension Scheme – our approach to enforcement

Defined Benefit (DB) pensions offer a guaranteed retirement income. People who want to transfer out of such a pension are required to get advice if the pot is worth more than £30k, to make sure that this is in their best interests. They rely on getting high quality advice which enables them to make an informed decision.

The British Steel Pension Scheme (BSPS) was a DB pension scheme. Around 8,000 people transferred out of the BSPS, and our evidence[1] suggests almost half (46%) did so after receiving unsuitable advice.

We have carried out around 30 investigations into firms and individuals regarding DB transfer advice related to BSPS. Investigations are now complete, and we are working to reach final decisions on what sanctions are appropriate where we have found misconduct. 

Redress for unsuitable BSPS advice

Alongside our enforcement cases, we have been making sure former BSPS members are able to get redress for unsuitable advice. 

More than 6,500 former members have been supported by the Financial Ombudsman Service (FOS), Financial Services Compensation Scheme[2] (FSCS) or through the FCA’s redress scheme. £106m in redress has now been offered to former BSPS members to put them back in the position they would have been at retirement. Further information can be found here[3] on our joint action to help former BSPS members get the retirement they worked for.  

We have also taken action where firms have tried to avoid their liabilities and make misleading redress offers to consumers.

Our approach to enforcement 

We have taken, and are taking, enforcement action where there is evidence of serious misconduct. 
We have seen 2 main types of misconduct in BSPS cases:

• In most cases, firms or individuals have breached the principle that they must conduct their business with “due skill, care and diligence”. This means that advisers have shown a significant lack of competence in their advice. 
• In more serious cases, firms or advisers have breached the principle that they must conduct their business “with integrity”. This means that they have been reckless or dishonest in how they have dealt with consumers and/or the FCA.

Actions we can take include:

• public censure 
• financial penalties
• banning unsuitable advisers
• supporting wider redress efforts 

Each of the investigations is complex and involved analysing significant volumes of evidence, interviews with key witnesses and reviews of customer files. We developed a tool (the DBAAT[4]) to assess the suitability of advice provided by firms and individuals. 

Completed enforcement actions

This table lists enforcement action taken to date and will be updated as we continue our work.

There may be redress due to consumers which will fall to the FSCS to pay. We have taken steps to maximise available redress by ensuring, where appropriate, that people we take action against pay money directly to the FSCS. This will ease the demand on the FSCS and ensure that the parties responsible for the wrongdoing pay redress.