The Financial Conduct Authority has said it will tackle firms that do not calculate defined benefit (DB) transfers compensation properly.
In an update published today (9 November) the regulator said it has recently received information about a small number of firms not following redress guidance.
These firms are not including all fees and charges in their DB pension advice redress calculations.
The FCA said its information suggests these firms are not considering ongoing fund costs and/or fully allowing for ongoing adviser charges in redress calculations.
Some of these firms may also be unfairly terminating consumer contracts after consumers make a complaint.
The regulator reports it is looking into these matters and if it identifies firms not calculating redress correctly, it will take action using the full range of powers.
That may include appointing an independent professional to check calculations and help consumers get the right redress.
In a statement the FCA said: “While we have only seen a small number of firms calculating redress incorrectly, we remind all firms undertaking calculations of the importance of allowing for fees and charges correctly.
“We have set out further detail to clarify how firms should calculate redress payments in our updated statement on pension transfers redress guidance. This is a complex area and firms need to take special care, given the potential for consumers not to receive the compensation they deserve.
“This is particularly important for any firm calculating redress for former British Steel Pension Scheme [BSPS] members, ahead of a decision by the FCA Board on whether to implement a consumer redress scheme.”
In April the FCA intervened to stop some British Steel firms from disposing assets to avoid paying compensation.
The rules came into force on 27 April 2022 and will continue until 31 January 2023.
Campaigners have challenged the FCA’s case work that underpins the BSPS redress scheme.
Has to made you smile, or cry would be a better word.
They created this mess, take 6 years to bring in new guidance and rules, get firms to apply them in hindsight, judge them in hindsight and then state they will be monitoring very closely.
When are advisers ever going to learn? At this stage the industry should be legally challenging these outcomes. The fact the BSPS2 is being used to calculate redress at all, when at the time of advice it was not agreed, would not be agreed until voting closed, which was legally binding to the members is criminal.
No adviser could state 100% that BSPS2 would be created, yet the regulators and ombudsman state it was REASONABLE to assume it would. In a Court of Law, the difference between REASONABLE and GUARANTEED is clear cut, in a Court of Law assuming makes an Ass U Me. I have no doubt had BSPS2 not been created the advisers that recommended it would now be facing claims as the members were deferred to the PPF.
All seems a bit too late….as usual.
I recently had a client who we helped get a successful complaint upheld by the FOS. The FOS sent a very clear redress formula, from which I easily calculated the amount of redress payable. The liable firm incorrectly calculated the redress 3 times, despite me telling them the way to do it. Finally they used an actuary (why I do not know) who came out with the figure I had calculated. During this time neither the FOS or FCA would intervene and mandate the amount due to my client, despite them agreeing with my calculation. it took the firm nearly 11 months to finally make the correct offer of redress.
It seems to me that once an adjudication has been made by the FOS, neither they, or the FCA, appear to want to enforce the payment of redress speedily. I can’t see what their latest PR statement will do to improve the situation.
I remember not so long back the regulator miss calculated our fees costing us many thousands ……
Was there a in house kick up the rear for that ?
Funny really when there is a lot of concerns about the toxic culture which runs right through the upper ranks of the FCA !!!
Just saying …