PS23/1: Extended asset retention requirement for firms under the British Steel Pension Scheme consumer redress scheme [pdf]

Following a consultation (CP22/22) in November 2022 to extend the temporary asset retention measures that applied / apply to firms involved in potential wrongful pension scheme member advice to keep them from disposing any assets prior to meeting their clients‘ redress claims, the FCA has now published a corresponding policy statement (PS23/1). Therein, the Authority briefly describes the feedback it has received to its consultation and outlines the final rules in this context as they will apply from January 31, 2023. The final rules are thereby identical to those proposed in the consultation paper with one minor modification as briefly outlined below.
To recall, in an effort to prevent firms that may be held accountable for wrongful advice in connection with the restructuring of the British Steel Pension Scheme (BSPS) to dispose any assets prematurely before meeting their obligations towards affected clients, the FCA installed temporary restrictions as to the disposal of assets (please see EventID 15897 for a detailed description of the measures). As the measures were about to expire on January 31, 2023, the FCA launched another consultation in this context to extend these temporary measures with some modifications to take into account recent developments in that matter.
According to the second consultation and the rules now finalized in the policy statement, firms will continue to face the following restrictions
(a) they are prohibited to conduct any financial transactions that are not considered to be „in the ordinary course of business“,
(b) they are obliged to seek FCA approval for specified transactions, and
(c) they must perform the Financial Resilience Assessment (FRA) and notify the FCA of this assessment
until they have resolved all redress cases for which they are responsible for. If the FRA indicates that a firm can pay all of its redress-related liabilities or if all relevant cases have been settled (all affected customers have been identified and notified to the FCA and all redress claims have been determined), it will no longer be subject to the „temporary“ measures and continue to conduct „business as usual“ – after having notified the FCA of this situation. Firms, however, whose Financial Resilience Assessment indicates that they haven’t got sufficient capital to settle those claims, still continue to be subject to above noted restrictions listed under (a) and (b).
In contrast to the consultation paper, the FCA has made minor adjustments to the rules to clarify that the Financial Resilience Assessment must take into account ALL cases of non-settled claims. For claims – settled prior to the coming into force of the new BSPS redress scheme – not to be considered in the FRA, it must be ensured that the settlement amounts have been „calculated in accordance with the applicable FCA rules and guidance“.