A legal challenge against the Financial Conduct Authority’s decision to set up a redress scheme for former British Steel Pension Scheme (BSPS) members has been scrapped.

According to press reports, the British Steel Advisor Group (BSAG) has dropped its challenge and paid the FCA £100,000 towards its costs.

It had hired FS Legal Solicitors to represent its challenge to the redress scheme and the lawyers filed an application on 23 December at the Upper Tribunal (Tax and Chancery Chamber).

The FCA had previously said it would "vigorously defend" its redress scheme against the legal challenge.

In January it said: "We regard the legal challenge as an attempt to delay the payment of redress that is due to some former BSPS members."

Today it welcomed the decision to drop the challenge and said it was pleased the group had agreed to make a "substantial contribution" to its costs.

The FCA said: “We welcome the British Steel Adviser Group's (BSAG) decision to drop the legal challenge against our decision to set up a redress scheme for former British Steel Pension Scheme (BSPS) members.

“Our view all along has been that the challenge was without merit and that we would vigorously defend the scheme.

“This challenge has, in our view, been pursued unreasonably with little intention to go to trial so we are also pleased BSAG has agreed to make a substantial contribution to our costs.

“We have publicly warned and taken action against certain BSAG firms for making unsolicited offers to former BSPS members.”

Under the redress scheme, firms have to review the advice they gave to former BSPS members to transfer out and pay redress to those who lost money because the advice was unsuitable.

The FCA has warned former BSPS members that accepting a redress offer now might mean they are not included in the FCA scheme and might not receive the right amount of redress.  

It advisers BSPS members not to reply to any unsolicited offers outside the FCA redress scheme.

Anyone who thinks they may have been affected can call the FCA helpline on 0800 098 4100 or read more about the scheme.