Dear CEO letter: British Steel Pension Scheme – concerns about third party actuarial providers [pdf]

Following the implementation of the new redress scheme for customers that have been wrongfully advised with respect to the British Steel Pension Scheme (BSPS), the Financial Conduct Authority (FCA) has published another Dear CEO Letter in this context. The letter is primarily addressed at firms subject to redress payments.
In the letter, the FCA expresses its concerns regarding certain financial advisory firms that conducted redress calculations for former members of the BSPS before the official redress scheme was implemented. These firms used online portals provided by third-party actuarial providers without proper actuarial oversight, resulting in misleading and harmful redress offers to former BSPS members. Some of these offers were unsolicited and aimed at excluding members from the redress scheme altogether.
In view of these practices, the FCA has reviewed the redress calculation of several firms that used such third party actuarial provider portals and found key deficiencies in the redress computations, including technical errors such as wrong data inputs or the use of wrong valuation dates. Therefore, the FCA reminds firms of its principles relating to integrity, skill, care, due diligence, and acting in customers‘ best interests. Firms and individuals will be held accountable when breaching these principles, and the FCA will not refrain from using its regulatory powers to prevent harm from consumers.
The FCA itself developed a calculator, reviewed by expert actuaries and the Government Actuary’s Department, which provides fair and consistent calculations and thus redress payments to BSPS consumers. Firms are expected to use this calculator for both scheme and non-scheme case.
Firms that have used a third-party online portal to calculate redress for former members of the BSPS are advised to review these offers, even if these offers have been accepted and settled. If the calculations were done without skilled actuarial oversight or if they are found to be deficient in any way, then firms are expected to recalculate the redress using the FCA’s calculator. If the recalculation shows that the original settlement offer was too low, the difference should be offered and paid to the consumer. On the other hand, if the original settlement was higher than the recalculated redress, the firm should not request repayment of the difference. In both cases, the firm must inform the FCA of these facts.