Officials are considering whether the rules are outdated and in need of an overhaul. The regulator today announced that it intends to consult on the matter in autumn.
Officials said in a statement this morning: “The current redress methodology used in the industry and by the Financial Ombudsman Service was originally developed for the Pensions Review of the 1990s. It is intended to put consumers back in the position they would have been in had they stayed in the DB scheme.
“The FCA is concerned that the redress methodology may no longer achieve this objective so has decided to consult on whether to update it. Any changes to the redress methodology will apply to future redress payments.”
Firms currently handling a complaint regarding advice given in connection with pension transfers should continue to comply with its obligations under the complaints handling rules, the FCA said.
The rules ask firms currently to investigate the complaint competently, diligently and impartially, and to assess the complaint fairly, consistently and promptly.
The FCA explained how firms should go about handling redress at the current time: “If, following its investigation and assessment, the firm needs to offer redress under the current methodology, the FCA would not expect it to be fair for the firm to attempt to settle the complaint on a ‘full and final’ basis until the outcome of the consultation is known. The FCA would expect the firm to write to the customer explaining why it is not in a position to provide a final response.
“However, the firm should also consider what options may be available for dealing with the complaint fairly on an interim basis before the outcome of the consultation is known. For example, if it is able to do so, the firm may offer provisional redress now and then provide a final response and any further redress (where appropriate) once the outcome of the consultation is known.”
The FCA said it recognised that for some consumers this may cause a delay in redress but it expects to reach conclusions from its review by spring 2017.