Redress aims to put consumers back in the position they would have been in had they remained in their DB scheme.
The regulator's most recent review has found that, overall, the current methodology remains appropriate. However, it is proposing some updates to help ensure the guidance continues to reflect best practice and is responsive to consumers’ individual circumstances.
As a result, the FCA has strengthened its view that redress should be paid into the consumer’s personal pension where possible to ensure it is used to make up pension shortfalls.
Any updates will apply to all cases that have not been settled when the changes come into effect. In the meantime, the FCA says it expects firms to "continue to calculate and offer redress in line with existing requirements".
Until any updates take effect, firms will need to explain to their customers how they have arrived at a figure, and how this puts them back in the position they would have been in, if they had not received unsuitable advice. Firms will also need to explain that customers have the option of waiting for the outcome of this consultation to settle their case.
The FCA is currently planning to set up a redress scheme for people who transferred out of the British Steel Pension Scheme. This should see advice firms pay over £70 million of compensation to British Steel workers in addition to over £70 million which has already been paid out.
The latest consultation also sets out proposals for calculating redress for the FCA's proposed consumer redress scheme for former British Steel Pension Scheme (BSPS) members. Calculations under the scheme will generally follow the same methodology as all DB transfer cases, but the FCA says it has "adapted certain elements to reflect the particular circumstances of the BSPS scheme".
In addition, the regulator is setting out proposals for a redress calculator if it decides to set up a scheme. This will help make calculations more consistent, ensuring former BSPS members receive fair and quick redress, and reduce the overall cost of calculations.
