FCA offers steelworkers £150 compensation for their loss of redress

Frank Field

Al Rush

It has been six years and four months since Frank Field wrote this letter to Megan Butler at the FCA.

Following evidence on the British Steel Pension Scheme (BSPS) in Parliament in November , the Work and Pensions Committee wrote to the Financial Conduct Authority (FCA) with concerns over the action it has taken that far regarding the Scheme.

On the “the need to protect consumers” , Rt Hon Frank Field MP, Chair of the Committee, said:

“While the action the FCA has finally taken to protect members of the BSPS is welcome, I remain concerned that its overall approach has been grossly inadequate. The FCA is a consumer protection body. It would behove them to stop pussy-footing around and start protecting consumers.

Transferring out of a gold plated final salary pension is generally a terrible idea, except in very particular circumstances, and firms routinely advising people to take this route should be shut out immediately.

It shouldn’t have taken the Committee squeezing it out of them for the FCA to make those names public, and otherwise it would take a degree and orienteering skills to figure out which firms they were. The FCA has been slow and reactive where these sharp practitioners and parasites moved straight in months ago.

If the FCA isn’t equipped to pick them out now it should just stop transfers happening while it gets its house in order.”

Six years , four months later, the FCA has pronounced that it has no case to answer.

It’s redress scheme, designed to provide compensation to steelworkers whose subsequent lives have been blighted by the loss of their pensions , has been wrecked by market forces

Rather than taking the WPC’s advice and putting up the shutters on transfers, the FCA allowed the crisis to continue in the next three years. It was only the combination of the pandemic, the banning of contingent charging and the explosion of gilt yields that put a stop to taking of CETVs.

The redress scheme , implemented in 2023 has delivered little or no redress for the same reason as no one takes transfer values any more. The redress scheme was based on mark to market valuations of pension liabilities, but the scandal was not about valuations but about the disruption of generations of pension accrual within BSPS for short-term gain by advisers and long-term pain for steelworkers. The redress scheme should have been calculated based on the situation at the “point of sale”, not at some arbitrary point six years later – determined by those guilty of the mis-sale.

Al Rush’s complaint

Al Rush, who grew up in Port Talbot and who has returned there to provide support to steelworkers since their 2017 “Time to Choose”, complained to the FCA’s

Al wrote to the independent complaints commissioner about the FCA’s failure to provide many steelworker’s with redress, a complaint based on the time it took to get the redress scheme in place and the failure of the redress scheme to provide redress.

The 47 page response is included below, it is also a belated response to the “allegations” of Frank Field,.

Instead of Frank Field (who we wish well), here is Al Rush’s response to this letter (redacted but clearly written to him)

This is the official announcement to the complaints put to the FCA by you, concerning their response to the BSPS scandal when they first became aware of the problem. Given the very clear public interest in this issue, and to support accountability to the public and Parliament, the FCA has taken the unusual decision to publish its letter so people can read for themselves how it reached its conclusions.

I do not think the FCA response has merit. Ignorance is no excuse and if it didn’t know about the problem, then it should have. I told them as early about the problem in Autumn 2017, and many newspapers were vociferous about it. The option now is to have your complaint presented to the Financial Regulator Complaints Commissioner.

What are your thoughts on the response to your complaints to Nikhil Rathi about how the FCA dealt with the BSPS matter? Some of you will have received letters notifying you of the response by the FCA to your complaint to it of the start of last year. To remind you, it was suggested to you that a complaint to the financial regulator complaint commissioner would be a logical next step if you had been unhappy with how the FCA responded to the BSPS scandal. Many of you subsequently submitted complaints in January.

When it became apparent that hundreds of you were aggrieved, I spoke with Philippa Hann of Clarke Willmott at that point and Philippa offered to coordinate a complaint on behalf of many of the clients it also had. The response to that complaint has now been received.

The FCA is offering you £150 for stress and inconvenience as a direct consequence of the delay in responding to your complaint. This is important to note that it is not offering compensation, based on its response to its handling of the BSPS crisis, but rather in how it handled your complaints. The FCA claims that it was unaware of the emerging problem of BSPS. The FCA is the regulator, ignorance is no excuse. I find it staggering that the FCA is suggesting that because it did not have an arrangement with the pensions regulator at the time, it should not be held to account for lapses in its intelligence picture. It is the regulator, the ultimate duty falls on Andrew Bailey and his team at the time to ensure that they did have the full picture.

It was not until the tail end of 2020 that the FCA finally started to take things seriously. By this point, the damage had been done. If the FCA could take things seriously in 2020 and 2021, then it could’ve done so in 2017 and 2018. It lists within its response to your complaints a series of actions that it carried out. I know from speaking with hundreds of you that you found the communications from the FCA confusing and inconsistent, and allowed your advisers to continue to tell you that their advice was good.

By this point, insurers had put all the rogue advisors almost out of business, or at least had cancelled their insurance. If Insurance were able to make an appreciation of the circumstances, why could the FCA not to do the same? The FCA says that it created information on its website, it does not understand that you predominantly are people who would not think to look for information on its website. For over two years, the FCA prevaricated and avoided its responsibilities. I attended a number of meetings with the FCA in person, the final one culminated in Andrew Bailey, now Governor of the bank of England, literally falling asleep on me and Philippa in a meeting room. He literally fell asleep. That could not be a more profound metaphor for the disaster that has been BSPS.

I do not think at this stage you need to get bogged down into details details of the redress scheme. Yes, we know the redress scheme is disadvantageous, and as I have explained on a number of occasions, if the FCA had acted swiftly, you would’ve had your compensation calculated in accordance with previous regimes which would’ve been far more suitable for you. It is almost as if the FCA needed to drag things out until it had a new redress protocol in place.

At this stage, I do not know how much more assistance Clarke Willmott will give you. It is certainly outside the scope of the contingent fee agreement that you have with them. I do not know how many of you will want to work with Clarke Willmott, but I think that you should read their letter carefully and consider your options. I certainly think that you should be pressing this matter forward with the financial regulator complaints commissioner, and earlier this morning, I wrote to Steve Kinnock requesting a group meeting with as many of you as possible.

You can take the view that you want to take the £150 and you want to put it behind you, or you can take the view that you have come this far and many of you have lost tens of thousands of pounds and you want to see proper justice. What are your thoughts? There is no guarantee that a complaint to the financial regulator complaints commissioner will result in a financial award. My understanding is that another solicitor is also reading the response by the FCA and will come up with some thoughts about it independently later.

The token sum, offered to a small sub-set of those impacted by the BSPS mis-selling scandal will not draw a line under the scandal , nor will the 47 page letter that announces it The scandal of unprotected consumers remains.