Redress so far (FCA https://www.fca.org.uk/consumers/british-steel-pension-redress-scheme)

To my blog on redress for the steelworkers, I’ve had this question on twitter.

So you just assume a loss, even though in these instances they were very generous CETVs?

 

It’s the right question. The FCA tell us that 300 steelworkers are – using today’s gilt-yield in calculations, likely to lose compensation because the calculation shows no loss.

If the basis of compensation is purely whether the CETV was sufficient to purchase the equivalent annuity to buy-back then it can be argued that there is always a chance at some point in the future where a loss won’t arise. Which is the problem of having a five to seven year window of compensation.

I reckon a proportion of the loss is financial and a portion is to do with the security of benefits that have been lost in the transfer. The determination on who is deemed to have been mis-advised is the FCA’s and as it stands some 46% of the transfers are deemed to have not been in the member’s interest.

Shouldn’t compensation be paid to all who were deemed to have bad advice?

I do think there is a compromise solution here and I think a flat rate of compensation should be paid to everyone who has received non, as an interim payment. It should not be clawed back from those who are deemed to have suffered no financial loss and should be paid on the basis of the loss of security resulting from bad advice.

A further payment can be paid on top, but no one who got bad advice should be excluded from compensation on the basis of the redress calculator.

If there is a finite pot for compensation, this would mean some redistribution to those who are currently excluded, but I do not see any cap on compensation.

Instead I see that the cost of redress has fallen over the past twelve months, while the cost of living has risen. The longer the delays, the less the utility from the payments, some steelworkers have died waiting for redress.

As my previous blog says, the injustice is in calculating redress based on 2022-4 gilt yields when the advice in question was given in 2017-18. Both the calculation and its timing seem arbitrary to me and if the timing of the calculation is in the hands of the organisation paying the compensation, the opportunity to game redress is obvious.

I am not the FCA or FSCS and I’m neither a steelworker or an adviser, but I would like to see fairness. The system has enabled bad advice to proliferate and the redress system cannot put steelworkers back into BSPS, the proxy for that is what we have, which seems an unworthy proxy.