The FCA is to retire its British Steel Pension Scheme redress calculator which has been used to provide an assessment of client losses incurred due to poor advice.

The calculator will be withdrawn from 1 April.

After 1 April firms will no longer have access to the calculator and will need to seek actuarial valuations of client losses, the FCA said.

The changes mark the steady winding down of the BSPS redress scheme, introduced to compensate thousands of British Steel Pension Scheme members who were persuaded, due to poor advice in many cases, to transfer their pensions to other providers. Many lost out as a result of poorly-advised pension transfers.

A number of advice firms who gave poor advice to the BSPS members have failed and subsequently dumped their liabilities on the Financial Services Compensation Scheme.

In an update yesterday, the FCA said that firms would no longer have access to the redress calculator once it is withdrawn. While the redress calculator is being withdrawn it does not mark the closure of the compensation scheme.

The FCA redress scheme was launched in 2022 with a requirement for affected firms to identify cases by March 2023. Compensation lump sum payments began to be made from December 2023 with many compensation offers made in 2024.

Despite predictions that compensation costs could top £50m, as of last July BSPS advisers themselves had paid only £8.87m in fines and redress.

One of the reasons for this was that the FCA decided that rather than imposing financial penalties on firms, it ordered these firms to make payments to the FSCS to make sure that those responsible for the wrongdoing paid the redress owed. 

Money paid out under the redress scheme was also lower than expected due to a variety of reasons, including some poor advice not resulting in financial loss, rising annuity rates making compensation costs lower and about half the advice being suitable. Overall, however, nearly half the pension transfer (49%) advice given by BSPS advisers was labelled as “unsuitable,” the regulator said.

The FCA said that as of July last year a total £106m in redress had been offered to 1,870 former British Steel Pension Scheme (BSPS) victims to put them back in the position they would have been at retirement. 

At least 15 individuals have been banned from working in financial services or holding a specific role following BSPS investigations.

While fines or redress payments to the FSCS total £8.87m some of them were being appealed, the FCA said last year. The FCA continues to pursue those who gave poor advice although the number of new cases has declined to a trickle.

The British Steel Pension Scheme was restructured in 2017 when around 7,700 members decided to transfer out of the scheme after receiving advice. The FCA said the poor conduct by some advisers caused, “significant harm and distress,” the FCA said.

In terms of the assessment of advice:

• 1,073 people (49.1%) had their advice assessed as suitable
• 1,079 people (49.4%) had their advice assessed as unsuitable
• in 34 cases (1.6%) there was missing information, which prevented firms from making an accurate assessment