PS22/14: Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme — FCA — GB

Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Policy Statement PS22/14 November 2022

PS22/14 Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Moving around this document Use your browser’s bookmarks and tools to navigate. To search on a PC use Ctrl+F or Command+F on MACs. This relates to Consultation Paper 22/6 which is available on our website at www.fca.org.uk/publications Email:
cp22-6@fca.org.uk
Sign up for our news and publications alerts See all our latest press releases, consultations and speeches. Contents 1 Summary 3 2 Evidence of consumer harm and the basis for an opt‑out redress scheme 14 3 Scope of the scheme 29 4 Scheme steps, suitability assessments, and oversight 34 5 Calculating and paying redress 59 6 Cost benefit analysis 73
Annex 1
Revised cost benefit analysis 79
Annex 2
Revised KC opinion 99
Annex 3
Revised Statistician’s Report 100
Annex 4
List of non‑confidential respondents to CP22/6 114
Annex 5
Abbreviations used in this paper 118
Appendix 1
Made rules (legal instrument)

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme 1 Summary
1.1 This policy statement (PS) sets out final rules for a redress scheme for former
members of the British Steel Pension Scheme (BSPS) who transferred out of it after being given unsuitable advice to do so. The rules require firms to assess any advice they gave to BSPS members to transfer out and to pay redress if the advice was unsuitable and caused the consumer a loss. In this PS we summarise the feedback we received to consultation paper (CP) CP22/6, our response to that feedback, and our final rules for a consumer redress scheme under section 404 (s.404) of the Financial Services and Markets Act 2000 (FSMA). We also summarise the feedback that we received to CP22/15, which set out our proposals for how firms should calculate and pay redress for scheme cases. Who this affects
1.2 These new rules will affect consumers who were members of BSPS and were advised to
transfer out of it. Consumers covered by the scheme will have the pension transfer advice they received assessed by the firm who gave the advice. They might be asked to provide some information to help with that assessment. If the consumer suffered a loss because of unsuitable advice, they will be offered redress. If the firm finds that the advice was suitable, consumers will be asked if they want to refer their cases to the Financial Ombudsman Service. The Financial Ombudsman Service will then consider if the firm has applied the scheme rules correctly when assessing suitability. Consumers can also refer their cases to the Financial Ombudsman Service at other stages of the scheme if they have concerns about determinations the firm has made under the scheme.
1.3 These new rules will also affect firms who advised consumers to transfer out of BSPS.
Firms will be required to assess the advice they gave on all cases within the scope of the scheme. If the advice was unsuitable, firms will be required to pay redress to consumers to put right any loss caused to them. Redress aims to put consumers back into the financial position they would have been in had they remained in the BSPS. We are proposing that where possible, if the consumer has not retired, redress should be invested in the consumer’s personal pension, so it grows to an amount that allows the consumer to buy an annuity on retirement that provides a guaranteed income. The wider context of this policy statement Our consultation
1.4 In CP22/6 we consulted on rules to establish a redress scheme for consumers who
were advised to transfer out of the BSPS. We had found that a large number of BSPS members suffered financial loss after being advised to transfer out. BSPS is a well‑documented and highly exceptional case. Our evidence, covered in more detail in
Chapter 3, suggests 46% of all transfers were unsuitable. This suggests much higher
levels of poor advice overall, as compared with what we have seen in higher‑risk firms in non‑BSPS pension transfer cases (17%). In CP22/6, we explained that despite our

PS22/14
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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme efforts to encourage complaints, only around 10% of BSPS consumers who received advice have complained. If we do not take action now it is likely that a number of consumers would be time‑barred from making a complaint if they wanted to do so in the future.
1.5 We proposed to implement a consumer redress scheme that requires firms who
provided advice to transfer out of the BSPS to review the advice they gave, identify if it was unsuitable and calculate and pay redress to consumers where required. A key objective of the scheme is to ensure that anyone who has lost out financially after receiving unsuitable advice can get any redress they may be owed.
1.6 In CP22/15 we consulted on redress calculation rules for the proposed scheme as
part of a broader consultation on changes to the general methodology for calculating
redress for non‑compliant pension transfer advice. Today we have also published final rules relating to the general methodology.
1.7 We are also consulting in CP22/22 on extending the temporary asset retention rules to
ensure that the rules would continue to apply until firms have resolved all relevant BSPS cases that are subject to the rules of the consumer redress scheme and other relevant cases outside the scheme. How it links to our objectives Consumer protection
1.8 The redress scheme will advance our objective to secure an appropriate degree of
protection for consumers, by ensuring that consumers who received unsuitable advice and suffered harm receive redress. Competition
1.9 We have considered the impact that the proposed redress scheme will have on
competition and we are satisfied that it promotes effective competition in the interests of consumers consistent with our competition duty under section 1B(4) of the Financial Services and Markets Act 2000 (FSMA). What we are changing
1.10 We have decided to implement a redress scheme. The redress scheme is intended,
as far as practically possible, to put BSPS members – who suffered a loss because of unsuitable advice to transfer their pension – back in the position they would have been if the advice had been suitable and complied with our requirements. Redress aims to put consumers back into the financial position they would have been in had they remained in the BSPS.
1.11 The scheme will cover consumers who received advice between 26 May 2016 and
29 March 2018 to transfer out of BSPS. 26 May 2016 is when the Department for Work and Pensions (DWP) launched a consultation on BSPS and 29 March 2018 is when BSPS entered Pension Protection Fund (PPF) assessment and was closed to transfers.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme During this time BSPS members went through a set of unique events, which caused harms to many of those who transferred their pension. What steps will firms be required to take under the scheme?
1.12 The scheme requires firms who gave the advice to assess whether it was suitable,
tell consumers the outcomes of their assessments and pay redress if the unsuitable advice caused the consumers to suffer a financial loss. Where firms decide that the advice they gave was suitable, they will be required to pass consumer details on to us so we can assist consumers to refer cases to the Financial Ombudsman Service for an independent review. Who will not be covered by the redress scheme
1.13 Information for consumers on the groups of people not covered by the scheme, and
the steps they can take, is set out below.
1.14 If a consumer is excluded from the scheme for one of the reasons below but think they
should be included, they can complain to the Financial Ombudsman Service. Customers of firms who have already gone out of business or who go out of business during the scheme If your adviser has gone out of business, you should make a claim with the Financial Services Compensation Scheme (FSCS). If the FSCS finds you had poor advice and that you are owed money, they can compensate you up to £85,000. You can find a list of firms that gave BSPS advice and are no longer trading, and how to make a claim at www.fscs.org.uk/bsps. If a firm subject to the scheme fails, or cannot meet its liabilities, FSCS will assess the claims of the firm’s customers using the methodology set out in the scheme rules. People who were given advice to transfer out of the BSPS but not between 26 May 2016 and 29 March 2018 Check your paperwork to find out when you were advised to transfer. If you received advice before 26 May 2016, you will not be covered by the scheme. You can find out how to check your advice and make a complaint yourself on our website. People who have already accepted compensation This could be after you made a complaint, because we already asked the firm to review its previous advice or where you have accepted compensation from FSCS. The outcome you received is likely to be the same as if your case had been considered as
part of the scheme.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme People who have already referred complaints to the Financial Ombudsman Service This could be after a complaint to the firm or because we asked the firm to review its previous advice. The outcome you received is likely to be the same as if your case had been considered as part of the scheme. People who transferred out of the BSPS after being given advice not to (ie insistent clients) Firms will need to check that people were correctly classified as an ‘insistent client’ and will let people know if they are excluded from the scheme on this basis. If you do not agree that you were ‘insistent’, you will be able to complain to the Financial Ombudsman Service. Depending on the circumstances, and what your adviser told you about this process, you might still be eligible for compensation. Get in touch with the Financial Ombudsman Service at BSPS@financial‑ombudsman.org.uk People who were out of time to make a complaint before the scheme was implemented If you transferred out before 24 November 2016 you may be out of time to complain. This means you wouldn’t be covered by the redress scheme unless you only became aware you may have had poor advice after 24 November 2019. If you think you should be covered by the scheme you can complain to the Financial Ombudsman Service. If Scottish law applies to your advice – this could be the case if you or your adviser are based in Scotland - and you transferred out before 24 November 2017 you may be out of time to complain. This means you wouldn’t be covered by the redress scheme unless you only became aware you may have had poor advice after 24 November 2017. If you think you should be covered by the scheme you can complain to the Financial Ombudsman Service.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Outcome we are seeking
1.15 The scheme will advance our objective to secure an appropriate degree of protection
for consumers by ensuring that consumers who were given unsuitable advice and suffered harm get redress. Figure 1 shows how it is intended to achieve this:
Harm reduced Eligible consumers receive redress for unsuitable advice they received FCA requires a consumer redress scheme Where firms classify in-scope advice as suitable, FCA will facilitate the referral of these cases to the Financial Ombudsman Service Advisers are required to review all cases within scope of the scheme The Financial Ombudsman Service decides whether to uphold or reject complaints Advisers calculate redress for advice found to be unsuitable Advisers that are unable to pay their redress liabilities exit the market Advisers pay redress liabilities, drawing on Professional Indemnity cover if available Consumers are referred to FSCS. FSCS pays up to £85,000 compensation Measuring success
1.16 The scheme includes reporting requirements for firms so we can monitor firms’
progress and compliance with the scheme.
1.17 We estimate that, in addition to the supervisory work we have carried out to ensure
BSPS consumers received redress, the proposed scheme will achieve the following outcomes:

Around 1,100 of in‑scope BSPS consumers who received advice in the relevant
period receive £49m redress
In total, firms pay redress of £33.6m and FSCS pays redress of £15.4m
90% of firms in the scheme are able to complete the scheme without becoming
insolvent
90% of cases in the scheme are completed by firms within time periods set out in
the rules, which include deadlines for assessing suitability and paying redress.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Summary of feedback and our response
1.18 We received 132 responses to CP22/6 from 28 consumers, 84 firms, 7 trade bodies,
2 insurers, and 11 others (including law firms and compliance consultants). We have carefully considered this feedback and the challenges we received to our proposals. For the reasons set out in this document, we remain satisfied that the legal tests to make rules under s.404 of FSMA are met. As part of this we have also updated the Cost Benefit Analysis (CBA). The expected redress that the scheme will deliver has reduced due to changes in economic circumstances, but it is our view that an opt‑out s.404 scheme remains preferable to alternative options by which consumers might secure redress. Alternative options generally rely on consumers being proactive and complaining and most affected consumers are fast approaching the deadline for making a complaint. Implementing a scheme will ‘stop the clock’ on the relevant limitation period (if the consumer does not opt‑out) and put the onus on firms to review the suitability of their advice.
1.19 We have made the following amendments to the rules we consulted on following
feedback from stakeholders:
a. As consumers might struggle to get information that firms require to assess suitability or calculate redress, we have introduced a new requirement for firms to get consumers’ consent to approach third parties on their behalf if further information is required. b. We have updated the Consumer Redress Scheme Sourcebook to combine the scheme rules and the redress rules for the scheme which we consulted on separately.
c. Amendments to the rules to ensure that where Professional Indemnity Insurance (PII)
cover is available, the insurer rather than the firm can carry out the scheme steps. d. Minor amendments to the Defined Benefit Advice Assessment Tool (DBAAT) to provide greater clarity for firms. e. A new guidance provision to make clear that where the consumer has died, the firm should take reasonable steps to contact and liaise with the estate/beneficiaries when carrying out scheme steps. f. Amendments to the headings and minor amendments to the wording of the letters firms are required to send to consumers following further reviews. We have added a new form to the redress determination letters to make it easier for consumers to complain to the Financial Ombudsman Service if they wish to do so. We have also expanded the guidance to explain that the letters can be adapted as necessary when someone other than the firm is carrying out the scheme steps eg, a competent person or the firm’s insurer. g. Amendments to clarify that the 6‑year limitation period starts from the date of transfer rather than the date of the advice. h. Amendments to the reporting requirements as we have further developed our supervisory and data strategy.
i. Amendments to the rules which set out the comparator scheme which the redress
calculation should be based on. j. A new provision which suspends the scheme timelines if a consumer refers their case to the Financial Ombudsman Service following a redress determination.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme k. When calculating redress, we expect firms to use the evidence on file to determine which scheme the consumer would likely have joined and use this scheme as the comparator. Where there is no evidence on file, BSPS2 should be the ‘default’ comparator. This is on the basis that two‑thirds of consumers chose to go into BSPS2 during TTC and the Trustee communications at the time emphasised their desire to secure better benefits (in BSPS2) than those which the PPF would provide.
l. Instead of requiring firms to calculate the augmentable element for every case,
the scheme rules require firms to ask consumers how they would like the redress to be paid. If the consumer would like to review how much redress is payable under both options (lump sum and augmentation) the firm must not charge them for this calculation, even if the consumer ultimately decides not to have their redress augmented m. We have decided that any tax implications for augmented offers should be calculated by firms outside the calculator. This is because firms are best placed to make subjective determinations for annual and lifetime allowance capacity based on the consumer’s upcoming changes in circumstances. n. We have extended the timelines for calculating and paying redress if the consumer specifies they would like the money to be paid into their pension. Equality and diversity considerations
1.20 We have considered the equality and diversity issues that may arise from the proposals
in this Policy Statement.
1.21 In CP22/6, we said that we did not consider that the proposals we consulted on
materially impact any of the groups with protected characteristics under the Equality Act 2010. We did not receive any feedback from stakeholders on this assessment. Nor did we receive any feedback on the proposals themselves relating to their impact on groups with protected characteristics.
1.22 We do not consider that the changes we have made post‑consultation change our
assessment.
1.23 We expect firms to take steps to identify and prioritise consumers who might be
vulnerable because of their circumstances or might need fast access to redress, for example if they are in or nearing retirement. Next steps
1.24 The scheme will start on 28 February 2023, allowing firms to prepare for
implementation by that date. Firms will have until 28 March 2023 to identify all consumers within scope of the scheme. Firms must write to all BSPS consumers within and outside the scope of the scheme by 28 March 2023. The letter will explain to the consumer that:

the firm will review the advice to transfer, unless the consumer decides to opt‑out; or
the case falls outside the scope of the scheme but consumers may still be able to
make a complaint in certain circumstances.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
1.25 If consumers do not receive a letter from the firm by 28 March 2023, they should
contact us on 0800 098 4100. Former BSPS members can find more information on how the scheme will work at www.fca.org.uk/bsps.
1.26 Firms must consider the cases of all consumers who have not opted out of the scheme
and contact consumers with the outcome of the review by 28 September 2023. If the advice was unsuitable and the consumer accepts the redress offer, firms must pay redress within 28 days.
1.27 The following diagram sets out the scheme steps and the timelines for completing
the steps:
What to do When to do it
Identify all consumers who made a BSPS pension transfer after the firm gave advice in relation to BSPS. By 28 March 2023 [1 month after scheme effective date] Identify all cases which fall within the subject matter of the scheme (scheme cases) and excluded scheme cases By 28 March 2023 [1 month after scheme effective date] Write to all consumers within and outside scope. By 28 March 2023 [1 month after scheme effective date] Acknowledge any consumer opt-outs Within 5 business days of consumer response Complete case reviews for all non-opted-out scheme cases using the BSPS DBAAT, or an FCA DBAAT completed prior to the scheme. These must be accompanied by an attestation by the compliance senior manager. By 28 September 2023 [7 months after scheme effective date]

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme What to do When to do it Insufficient information and cannot assess suitability Sufficient information Insufficient information but can assess suitability Contact consumer and/or third party with the consumer’s authority (including issuing chaser letter, and taking reasonable steps to make contact) and, if sufficient information received, complete case review Send chaser letter within 5 business days of the consumer or third party not replying to initial letter after 14 days. If no reply, send second letter within 5 business days of the four weeks expiring Information not provided Information provided Scheme case may no longer fall within subject matter of scheme, write to consumer By 28 September 2023 [7 months after scheme effective date] Firm makes finding on suitability of advice By 28 September 2023 [7 months after scheme effective date] ‘Unsuitable’ ‘Suitable’ ‘Unsuitable’ but did not cause loss Issue no loss redress determination. Notify the FCA of outcome and consumer details Issue no loss redress determination For suitable redress determinations, notify the FCA in the first regular report which falls due after the expiry of 14 days from the date of the redress determination Issue letter notifying about the firm’s finding of unsuitable advice

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme What to do When to do it Contact consumer and/or third party with the consumer’s authority (including issuing chaser letter, and taking reasonable steps to make contact) and, if sufficient information received, complete redress calculation. If consumer requests augmentation, issue a further letter and, if necessary a chaser letter, to third parties to seek necessary information. Send initial letter requesting information at the same time as sending the redress determination (or when authority received to write to a third party) Send chaser letter within 5 business days of the consumer or third party not replying to initial letter after 14 days. Information not provided to calculate redress Information provided with or without request to augment and/or consider other losses By 28 December 2023 [10 months after scheme effective date] or By 28 February 2024 [12 months after scheme effective date] where augmentation offer requested and/or a claim for other losses Scheme case may no longer fall within subject matter of scheme, write to consumer Calculate lump sum redress (and, where requested by the consumer and enough information is provided on each, augmentation and/or other losses) that may be owed to consumer No redress due Redress due Issue no loss redress determination Issue redress determination to consumer. Ask consumer to check summary calculation report and accept offer confirming method of payment (if consumer requests full calculation report send it within 5 days of the request) By 28 December 2023 [10 months after scheme effective date] or By 28 February 2024 [12 months after scheme effective date] where augmentation offer requested and/or a claim for other losses

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme What to do When to do it Offer acceptance provided Offer acceptance not provided Send consumer a chaser letter (including taking reasonable steps to make contact) to accept offer Send within 5 business days of four-week deadline in the initial offer letter expiring Consumer accepts offer and confirms method of payment Consumer does not provide acceptance of the offer Payment arranged by selected method. Send payment confirmation and detailed calculator report to consumer Within 28 days of consumer acceptance of the offer unless CONRED 4.4.9R(1)(b) applies Offer expires, write to consumer. Firm to fairly consider exceptional circumstances for paying offer beyond its validity period Offer expires 3 months after date of initial offer letter and letter to be sent to consumer within 5 days of offer expiry

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme 2 Evidence of consumer harm and the basis for an opt‑out redress scheme
2.1 In this chapter, we summarise the feedback we received about whether we have met
the legal test for a s.404 redress scheme, and our views in response to this feedback. Legal Test
2.2 We can only implement a consumer redress scheme if the following legal conditions
are met, as set out in s.404 of FSMA:

it appears to us that there may have been a widespread or regular failure by firms
to comply with requirements applicable to carrying on an activity (here, providing advice to transfer out of the BSPS)
it appears to us that, as a result, consumers have suffered (or may suffer) a loss
which a court would remedy
we consider that such a scheme is desirable for the purpose of securing redress,
having regard to other ways in which consumers may obtain redress
2.3 In CP22/6 we explained why we considered that the legal test was met, the evidence
that we had gathered for this, and why we thought an opt‑out redress scheme under s.404 was a desirable option compared to alternative options.
2.4 We asked the following questions in CP22/6:
Q1: Do you agree with our assessment that unsuitable advice to BSPS customers was widespread in the period we looked at? Q2: Do you agree with our view that BSPS members who received unsuitable advice are likely to have suffered loss? Q3: Do you agree that the legal test for making a consumer redress scheme under s.404 of FSMA has been met? Widespread failure
2.5 Overall, consumers and their representatives, some law firms and compliance
consultants agreed that it appeared that there had been a widespread failure by firms to comply with the requirement in the Financial Conduct Authority (FCA)’s Conduct of Business Sourcebook (COBS) 9.2.1R(1) to take reasonable steps to ensure that the advice to BSPS members to transfer was suitable.
2.6 Most firms and their representatives (60% of the total responses received to this
question) disagreed with our view that there appeared to have been a widespread failure to provide suitable advice.

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2.7 The main challenges from respondents who disagreed with our proposals were:

disclosure and evidence challenges
concerns about the sampling methodology
reliability and validity of the suitability assessment tool used for file reviews
the evidence base for firms advising on fewer than ten transfers
Disclosure and evidence challenges
2.8 Some respondents took the view that the consultation process was not fair because
we did not disclose sufficient information to firms about the DBAAT before or when requested during the consultation period. We also did not disclose the DBAATs completed during our file review exercise, which helped to inform our evidence base for the proposed scheme. Some asked us to publish more data and information about other matters including:
the process we used to select a third party (Grant Thornton) to carry out the file
reviews, the instructions we provided and details of how the third party approached the file reviews.
the underlying reasons why 46% of cases were found to be unsuitable and the
proportion of cases which involved suitable advice
how many decisions had been challenged by firms, which led to a reversal the decision
any working papers and guidance notes accompanying the full completed DBAATs
the data underlying the statistical analysis in the report that was annexed to
CP22/6. We asked an external statistician to advise on a sample design for the review of advice taking into account information that we already held from our supervisory investigations and multi‑firm review, to produce results to establish with reasonable certainty a) the percentage of transactions that involved unsuitable advice and b) whether unsuitable advice was widespread across firms. Concerns about the sampling methodology
2.9 Approximately half a dozen firm and firm representative respondents said they
believed that the sampling methodology our independent statistician used is flawed, and so it was not reasonable for us to conclude that there appeared to have been ‘widespread’ failure. The main objections that respondents raised to the sampling exercise and analysis, discussed in more detail below, were that
the reliability and validity of the DBAAT has not been demonstrated
the sample is not completely random (because selection to Group 2 was on the
basis of stratified sampling)
the sample for Group 2 is too small
the weights attached to the sample are a failed exercise in reducing bias
2.10 Some respondents argued it was unreasonable for us to take the view that a 46%
unsuitability rate is representative of the wider market, given the overall sample size. This was because the sample sizes and groups were small, relative to total firm and member population, as well as the small sample size per firm.
2.11 Another concern was potential bias and skew in the sampling. Some respondents took the
view that the higher unsuitability rates are linked to a small number of firms that had carried out higher volumes of transfers, and that the sample was not completely random.

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2.12 In CP22/6 we explained that firms had been divided into 3 groups for the purposes of
the file reviews:

Group 1 – 302 files were selected from the 36 firms in this group. The firms in this
group are ’higher‑risk’ firms which were identified during a multi‑firm review of Defined Benefit (DB) transfer advice.
Group 2 – 63 files were drawn from a stratified random sample of 53 firms (from
a total Group 2 ‘population’ of 295 firms included in our further investigations of advice given to BSPS members to establish a market‑wide picture of the quality of advice given to them.
Group 3 – There were a further 55 to 172 firms responsible for around 1000
transfers. At the time the file reviews were carried out we did not have a complete list of Group 3 firms, so Group 3 firms and their transfers were not included in the file review exercise.
2.13 Some respondents made the following comments about the groups in our sample:
Group 1: there was concern that this was only partly randomly sampled, with the
remainder of cases coming from high‑risk firms.
Group 2: some noted its much smaller sample size compared to Group 1, and
the fact that over 50% of files did not feature any unsuitable advice. One or two respondents suggested that Group 2 was only included to balance the more skewed Group 1 findings.
Group 3: some asked why this was excluded from the file reviews when it accounted
for 13% of all transfers. A few respondents suggested more data was needed on smaller volume firms who conducted fewer than 10 transfers.
Respondents gave alternative suggestions for the sampling approach. For example,
basing this on banded levels of transfers per adviser, numbers of files per firm as a percentage of their overall exposure and examining more closely the numbers of firms with unsuitable cases against the total numbers of firms who advised former BSPS members. Reliability and validity of the suitability assessment tool used for the file reviews
2.14 In CP22/6 we proposed that firms should assess suitability of advice using a
BSPS‑specific version of the FCA’s DBAAT.
2.15 Several respondents raised concerns about the DBAAT as part of their response to
our finding of a widespread failure. We discuss the feedback received on the DBAAT in more detail in Chapter 4. Evidence base for firms advising on fewer than 10 transfers
2.16 A common view, especially among firm respondents, was that most of the harm
has been caused by higher risk firms that carried out higher volumes of transfers. In CP22/6 we explained that the results of our file reviews showed that 5% of firms (16) caused over 15% of transfers (2300), that up to 33% of cases in the sampling originated from 7 firms under FCA investigation.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Other concerns
2.17 Some firms told us they had tried their best to help BSPS members meet their pension
income objectives during a difficult period. They said that during the Time to Choose (TTC) period, steel workers and their advisers were given short timescales to make important decisions with very limited information. A few respondents suggested we should have taken these potentially mitigating circumstances more into account when carrying out file reviews.
2.18 Some respondents thought that many of the worst firms have already either: ceased
trading and so their cases are with FSCS, have removed their DB transfer advice permissions, are otherwise under FCA investigation, or their cases are with the Financial Ombudsman Service. A few respondents suggested if there was widespread failure by hundreds of firms, this must indicate a FCA supervisory failing, for example a lack of communications or guidance to firms.
2.19 Some respondents suggested the low number of complaints to‑date undermines the
argument for widespread failure among firms. A few respondents thought if the true level of unsuitability is 46%, then the number of complaints made to advice firms and the Financial Ombudsman Service would be much higher. Data from the Financial Ombudsman Service and FSCS
2.20 In CP22/6 we explained that when considering whether it appeared that there had
been a widespread failure, other sources of evidence we might use or extrapolate from included data from the Financial Ombudsman Service and the FSCS.
2.21 Some respondents expressed concerns about the differences between FCA, the
Financial Ombudsman Service and FSCS figures in terms of unsuitability and uphold rates referred to in CP22/6. Many respondents queried why the Financial Ombudsman Service’s uphold rate was 98% compared to our 46% unsuitability estimate. A few firm respondents said that FSCS does not always have access to the full advice file, so its decisions and therefore its uphold rate of 90.8% may also be unreliable.
2.22 There were also several comments about the skillset, training and pension transfer
expertise of Ombudsmen and case assessors. Some respondents felt that Ombudsmen and case handlers should hold a Pension Transfer Specialist (PTS) qualification.
2.23 A few respondents suggested that Financial Ombudsman Service and FSCS cases and
uphold rates are misleading as a barometer for ‘widespread’ failure in the market. This is because their cases are more likely to feature unsuitable advice or otherwise poor standards of conduct. Our response We have carefully considered the feedback we received from stakeholders, including from those that had a fundamental issue with our proposals. For the reasons summarised below we remain satisfied that the legal tests to make rules under s.404 of FSMA are met.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme The legal test is that it ‘appears to the FCA that there may have been a widespread or regular failure’. It is our view that the widespread or regular test is a matter for regulatory judgement, to be interpreted in the round based on all of the available evidence. To meet this test, it is not necessary for us to collect specific evidence of failure by each of the firms subject to the scheme, nor is it necessary to identify a particular minimum percentage of failure rate before the scheme can be triggered. In this case it is our view that we have extrapolated reasonably from the evidence we have to determine that the failure appears to be widespread or regular, and we are also of the view that the underlying evidence is reliable. BSPS is a highly exceptional case. Our evidence suggests 46% of all transfers were unsuitable. This suggests much higher levels of poor advice compared with that we have seen even in higher‑risk firms in non‑BSPS pension transfer cases (17%). Although we recognise that some advisers sought to provide suitable advice to clients, we continue to believe the evidence suggests there appears to have been a widespread failure to provide suitable advice to BSPS members during the period that the scheme cover (advice received between 26 May 2016 to 29 March 2018 to transfer out of BSPS). Below we address each of the 4 main challenges raised by respondents:
Disclosure and evidence challenges
On providing the underlying rationale behind individual file review outcomes and giving further information on the file review process more generally, while we do not disclose completed DBAATs, we do provide detailed feedback letters to individual firms that explain the key reasons behind the outcome, the evidence we relied upon, and the rules we considered were not met. We invited firms to provide any further material and contemporaneous information they have to support the advice provided so that we can review further and assess whether this has an impact on our assessment. If firms did provide further material and contemporaneous information, we reviewed this. In addition, some firms provided completed DBAATs that they or third‑party professionals had completed as an assessment of file reviews we had carried out. When provided with DBAATs, we completed a further assessment of the firm’s reviews to assess whether there should be any change to the initial assessment we carried out. During the consultation period we also published additional information on our approach as FAQs. This included information on DBAAT training, the qualifications of those who completed file reviews and the ‘quality assurance’ oversight applied. We also published additional data that explains the rating for each file review in our sample, with further detail about how our statistician weighted each review to enable us to reach a view on the suitability of advice across the market. It also includes a summary of our finding on the investment advice. Alongside this we provided further information about how we conduct our file reviews and the quality assurance we apply. We consider that stakeholders had the information they needed to reach a view and meaningfully respond to the consultation.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Insistent clients were included in the file reviews carried out for firms in Group 2 because at that time we had not reached a view on whether they would be included in any potential scheme. Therefore, when we selected files randomly, we selected and reviewed 2 insistent client files out of 63 as part of the sample. We assessed 1 case as Unclear and the other as Suitable. Concerns about the sampling methodology We have carefully considered the points respondents raised and discussed them with our statistician. We continue to believe that the approach taken to the sampling process was robust and remains sufficient for us to take the view that there appears to have been a widespread failure by firms. Group 2 sample For the Group 2 sample, we used stratified random sampling with unequal probabilities of selection. This is an established statistical sampling method and is a technique often employed to ensure a sample is representative across and within sub‑groups. It is not a ‘simple random sample’, although it is still random. The evidence from the sample is that failures were spread across a wide range of firms. We disagree that the Group 2 sample is too small, and no clear evidence was presented to support the argument made by respondents. One respondent suggested the minimum sample size should be 35 files. We conducted 63 Group 2 file reviews, nearly double the suggested minimum. The larger the sample size, the lower the “confidence interval” and the more “certainty” you have. However, we have presented our results including the relevant confidence intervals. Use of weighting Our statistician also considers that some respondents may have misunderstood the use of weighting in the sampling. Weighting is an established statistical method of ensuring a sample represents the population it is drawn from. Using stratified random sampling means, in this case, that firms and files had an unequal probability of selection. Therefore, it is standard in such cases to use weightings to “rebalance” the results to ensure they are representative of the broader population. Following a further detailed review of our supporting evidence and data we identified a minor data gap and anomaly in the cases which formed
part of Group 1. For 3 files where advice was identified as suitable, we
were unable to locate the analysis underlying the findings. We have also found that due to human error there was a minor issue where 2 cases were recorded incorrectly and classified as unsuitable in the data sent to our statistician, when they should have been classified as suitable. Our statistician re‑ran the analysis and rectifying this small anomaly and including the results of the file reviews from the earlier period has had no material impact on her analysis. Her view remains that 46% of the transfers across the relevant period that we consulted on involved unsuitable advice and, following our review, we are confident that there are no other data gaps or anomalies.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Please see Annex 3 for a revised report from our statistician which responds in more detail to some of the views and challenges received on our sampling methodology, evidence base and the conclusions reached from that. Reliability and validity of the suitability assessment tool used for file reviews (the DBAAT) The ‘BSPS DBAAT’ that we consulted upon in CP22/6 is a tailored version of the ‘FCA DBAAT’ we published in January 2021. The BSPS DBAAT, and associated instructions are amended to focus on the specific features of the BSPS situation rather than to cover DB transfer advice more generally. We continue to take the view that the DBAAT tool used for the file reviews is robust. We address the feedback received on the DBAAT in
Chapter 4, where we also provide further clarifications and guidance to
firms and other stakeholders about how they should use this tool. The evidence base for firms advising on fewer than 10 transfers We have carefully considered the feedback we received about firms that carried out fewer than 10 transfers. Our interpretation of the test of widespread failure under s.404(1)(a) FSMA is that we are required to establish widespread failure across firms generally. We are satisfied that when the results of the file reviews are extrapolated from the sample to the population of firms as a whole, including firms that advised on fewer than ten transfers, this test is met and so these firms should be included in the scheme. There does not seem to be any good reason to treat customers of these firms differently or to segment different groups of firms when considering if the legal test is met. While all firms will be required to carry out suitability assessments under the scheme, they will of course only need to pay redress if the advice was unsuitable. If customers of these firms received unsuitable advice but were not covered by the scheme, they may not take any action and so could run out of time to make a complaint. Our external statistician notes in her revised report that, after assessing the sampling following further FCA data received, there is now greater confidence/less material uncertainty in the data that the estimates for firms with fewer than 10 transfers are different to those for firms with more than 10 transfers. We have not altered our final approach because, after taking into account this difference, we consider that the evidence remains sufficient to suggest unsuitable advice may have been widespread in the market. We do not consider that a certain “level” of regulatory failure would be acceptable or would not count as widespread and certainly not a level in the region of 19%. Of the 352 firms who are in‑scope of the scheme, we estimate that 275 arranged fewer than 10 transfers over the relevant period. We asked our statistician how many additional files we would need to review to narrow our estimated range of unsuitable advice for firms that carried out fewer than 10 transfers. We have decided not to proceed with carrying out additional file reviews because reviewing additional files might not significantly narrow the confidence intervals. It would require significant extra resource and cost which is not proportionate and which is not

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme necessary to justify our view that there may have been a widespread regulatory failure. Collecting additional evidence also has to be balanced against other concerns, for example it could delay the start date of the scheme which could prejudice the interests of consumers and result in some consumers becoming time barred. Other concerns Although some firms who provided high volumes of unsuitable advice are either no longer active in the market or subject to supervisory action, we remain concerned that a number of consumers received unsuitable advice to transfer and may have suffered harm as a result. We do not agree that widespread failure among firms suggests an FCA supervisory failing rather than widespread firm conduct failings. We have already carried out supervisory work with higher risk firms which has resulted in consumers receiving £20m in redress. Given the widespread nature of the conduct failings it is appropriate to take swift action to ensure that consumers who received unsuitable advice receive redress before the relevant time limits for making a complaint expire. The FCA’s communications to firms and rules in place during the TTC Period were sufficient and clear enough to enable reasonable, competent advisers to provide suitable advice to their clients. In CP22/6 we outlined the most likely reasons for the low level of complaints to‑date, despite our estimates for the level of unsuitable advice in the market and the array of communications sent to consumers informing them about the option to complain. These included: consumers being unaware that they could complain, not knowing whether they may have received unsuitable advice or if they have suffered financial loss as a result, due to the inherent complexity of pension transfer advice. A number of steelworkers we spoke to in person told us that they were reluctant to challenge their financial adviser directly. On the basis of this evidence, low levels of complaints do not indicate low levels of unsuitability. Data from the Financial Ombudsman Service and FSCS Our estimated unsuitability rate of 46% is based on file reviews including a random sample of those firms who advised BSPS members. The results are representative of the broad population of firms. Financial Ombudsman Service uphold rates relate to members who did not agree with the firm’s handling of their complaint. The cases referred to the Financial Ombudsman Service are a self‑selected group and excludes (a) members who settled claims with firms without going to the Financial Ombudsman Service and (b) members who were satisfied with their response and did not complain further. The results are not necessarily representative of the population as a whole but may indicate an increased level of harm in a sector. This is why we take this rate into account when considering whether the widespread test has been met. In addition, the FOS
currently applies the “fair and reasonable” test, which is more flexible and generous as compared to that in the DBAAT which is more detailed and closely tied to the regulatory wording of the Conduct of Business Sourcebook.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme In our current guidance in the Consumer Redress Schemes sourcebook (CONRED) we explain that:
‘The FCA will only proceed if it has robust evidence to support its view that it appears there may have been a widespread or regular failure. Sources of evidence which the FCA might use and extrapolate from include the results of the FCA’s thematic work, enforcement investigations, mystery shopping, complaints to the FCA, firms or to the Financial Ombudsman Service, and information from consumer groups and reports from skilled persons.’ Pension‑specific qualifications are not required to adjudicate on Financial Ombudsman Service cases. The Ombudsman will decide a complaint by reference to what is, in the Ombudsman’s judgment, fair and reasonable in all the circumstances of the complaint, taking into account the relevant law and regulations, regulatory rules, guidance and standards and codes of practice and established good industry practice. Where specific expertise or further information is needed to resolve a particularly complex Financial Ombudsman Service complaint or FSCS claim, these organisations can seek internal or external advice and assistance. We have worked very closely with the Financial Ombudsman Service on the design of the scheme and as part of the ongoing Wider Implications Framework. If scheme cases are referred to the Financial Ombudsman Service, they will be required to determine whether the firms has followed the scheme rules, for example when assessing suitability or calculating redress. Actionable loss
2.24 Most respondents who answered this question agreed that consumers have suffered
(or may suffer) a loss because of unsuitable advice to transfer out of the BSPS. The following were given as examples of factors which might increase the likelihood that the consumer has suffered loss due to unsuitable advice to transfer:

poor investment advice to invest funds in high risk, illiquid, offshore or otherwise
unregulated and inappropriate investments not suited to the member’s attitude to risk, with high charges and low realisable value.
advisers not clearly describing how investment charges will reduce the monetary
value of the transferred funds over the consumer’s expected lifetime.
loss of guaranteed income with inflation/index‑linked increases and spousal
benefits vs bearing risk of potentially volatile investments with ongoing charges.
the client transferred before BSPS trustees applied higher cash equivalent transfer
values (CETV) estimates to the scheme.
2.25 Some respondents provided evidence of the types of harm members suffered due to
firms failing to comply with our requirements. For example, some cited as case studies instances where vulnerable consumers with little financial knowledge received CETV quotes of around £600,000, experienced coercive and misleading behaviour from their advisers (such as being offered incentives) and ended up losing significant losses or

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme in some cases all of the value of their pension pot. Other consumer respondents said that they had suffered significant stress, anger and worry about their quality of life in the future because of their transfer and the way that their advisers treated them. Other respondents flagged that some consumers had been left with uncompensated losses as a result of the FSCS compensation limits.
2.26 Some respondents suggested that other organisations that contributed to the
uncertainty and issues that steelworkers faced should also be liable for the losses that steelworkers have suffered.
2.27 One respondent argued that because we did not contact consumers to ask for their
views as part of our file reviews, it was not reasonable for us to conclude that a firm’s advice was the effective cause of their decision to transfer.
2.28 Some industry respondents said that in certain scenarios, some members may have
benefited from transferring and may be better off in a flexible DC arrangement, despite losing their guaranteed lifetime DB income stream.
2.29 Several respondents mentioned our review of the pension transfer redress
methodology and guidance in our finalised guidance publication FG17/9, saying that changes to its assumptions and methodology would affect the likelihood of loss. Some respondents referred to Question 19 in CP22/6, which set out our high‑level proposals for how redress would be calculated and paid for in scheme cases. Comments on the redress methodology are covered in Chapter 5. Our response Our legal analysis is that where a consumer received advice to transfer their BSPS benefits to a DC scheme, and that advice was unsuitable, then the consumer should, in principle, be entitled to recover the full amount of the loss from that transfer from the firm. This is regardless of the actions of other parties, such as introducers, or delays in the trustees providing information to steelworkers about options leading up to the TTC period. It is reasonable, in the circumstances, that the adviser’s advice was the effective cause of consumers’ decisions to transfer because they were likely to rely on that advice rather than other information. We do not agree that we should have contacted all consumers when carrying out our file reviews. In most cases there should be sufficient information documented on the file to assess suitability without needing to contact consumers for additional information. As we are required to establish actionable loss on an ‘appears to be’ basis, contacting every consumer directly during a file review would be costly and disproportionate and would significantly delay implementation of a scheme which could result in some consumers becoming time barred. Assessing whether a consumer might benefit from transferring is part of the advice process and can be included by firms when completing the DBAAT, alongside all other relevant factors in the advice they gave to each member. Our view remains that for BSPS and other instances of pension transfer advice, most consumers suffered a loss by receiving a lower value investment than their DB scheme.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme We addressed the feedback received on BSPS redress calculations (Question 19 in CP22/6) when we published CP22/15 on 2 August
2022. This CP proposed changes to the FCA’s pension transfer redress
assumptions, methodology and guidance, with the consultation period closing on 27 September 2022. We published the final changes to our pension transfer redress guidance in PS22/13. Please see Chapter 5 for further details of how redress should be calculated and paid for scheme cases. Desirability of a scheme compared to alternative options
2.30 Respondents generally agreed that a significant number of BSPS consumers are likely
to have suffered financial loss where they received unsuitable pension transfer advice. Recognising the unique, exceptional circumstances surrounding BSPS, there was also sizeable agreement, especially among consumer advocates, some trade bodies and compliance organisations, that the remedy to address this harm requires similarly exceptional regulatory action by us.
2.31 Respondents who supported our proposals highlighted that our CBA showed that an
opt‑out scheme would reach the most consumers and provide the most redress out of all the options that we considered in CP22/6 assessed. They saw this as appropriate, given the high chance of harm and high rates of unsuitable advice in the market, the number of consumers affected by poor advice, and the low number of complaints to firms and the Financial Ombudsman Service to date. Overall, they considered our opt‑out s.404 redress scheme would be the best way to ensure that consumers who were given unsuitable advice receive compensation.
2.32 Several respondents argued our proposed scheme was not desirable because we had
under‑estimated the costs incurred, such as compliance and redress costs to firms, costs to the FSCS and other parties, and lower PII coverage than we estimated in our CBA. We address this feedback in full in Chapter 6, where we discuss our CBA.
2.33 Firms and their representatives who disagreed with our analysis flagged the following
perceived risks, which they saw as making the proposed scheme less desirable than other options to ensure consumers can access redress:

A scheme would impose significant costs on firms but might not be successful
if high levels of consumers opt out. This might be highly likely given a significant proportion of consumers have not complained to‑date, despite contact from us and others encouraging complaints, FCA letters to all transferees, high levels of claims management company (CMC) activity and law firms encouraging members to complain.
The costs of the scheme might outweigh the benefits if a higher number of firms
fail than expected. This would have significant knock‑on effects for the FSCS and lead to increased levies imposed on other firms, negative consequences for advisers’ livelihoods, and worse outcomes for orphaned clients of firms that fail during the scheme (BSPS and non‑BSPS). A few respondents referred to figures mentioned in CP22/6 – 17/45 firms (37%) required to do a Past Business Review (PBR) have since entered insolvency.

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If significant numbers of consumers are nearing the deadlines to make a complaint,
they are likely to be excluded before the scheme comes into force, reducing its value as a route to secure redress.
2.34 A few industry respondents suggested that the high uphold rates at the Financial
Ombudsman Service meant that a s.404 redress scheme is unnecessary, since almost all consumers might receive redress if they complained outside of the scheme and referred the matter to the Financial Ombudsman Service. Our response We have updated the Cost Benefit Analysis (CBA) that accompanied CP22/6 (See Annex 1). While the expected redress that the scheme will deliver has reduced due to changes in economic circumstances, it is our view that an opt‑out s.404 scheme remains preferable to alternative options by which consumers might get redress. Alternative options generally rely on consumers taking proactive action to complain and most affected consumers are fast approaching the deadline for making a complaint. Implementing a scheme will ‘stop the clock’ on the relevant limitation period and put the onus on the firms to review the suitability of advice if the consumer does not opt‑out of the scheme. We note that some consumers may opt out of the scheme or might not respond to requests for information. We have designed the scheme to make it as straightforward for consumers as possible. To address feedback that consumers might struggle to get information firms require to assess suitability or calculate redress, we have introduced a new requirement for firms to get consumers’ consent to approach third parties on their behalf if they require further information. Comments we received about the alternative options
2.35 We explained in CP22/6 why we had concluded that an opt‑out s.404 redress scheme
was a desirable option compared to the alternative options available. The alternative options we considered in CP22/6 were:
the ‘counterfactual’ – continuing with current supervisory and enforcement work
but doing nothing extra
Carrying out more supervisory action on a firm‑by‑firm basis
Carrying out further activities and engagement to encourage consumers to
consider complaining
An opt‑in consumer redress scheme under s.404
2.36 On these alternative options we asked the following questions:
Q4: Do you have any comments on the other ways we considered to ensure that consumers who have suffered financial loss as a result of unsuitable advice receive redress?

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Q5: Do you agree with the estimates and assumptions that we have made about costs, benefits, scale of reach, and consumer response rates for each alternative option we considered? Q6: Are there any other alternative options that we should consider?
2.37 The comments that we received on the CBA are discussed in more detail in Chapter 6.
Most industry respondents did not agree with our CBA estimates and the assumptions that we made about the costs, benefits, scale of reach, and consumer response rates for each alternative option considered. Some industry respondents said that we should consider alternative options to those set out in the consultation paper. Option 1 – the counterfactual approach
2.38 While many industry respondents thought that individual firm‑by‑firm action would be
better than market‑wide action, only a few believed the current approach is working well to ensure consumers can access redress. Some respondents said that our current supervisory and enforcement powers are sufficient for dealing with high‑risk firms and remedying the harms they have caused. Option 2 – enhanced supervisory action firm‑by‑firm
2.39 Some firm respondents who expressed a preference for individual firm‑by‑firm action
believed this might be the most appropriate option for higher volume, higher risk firms that are most likely to have caused the greatest level of harm to consumers. They also suggested this approach would be fairer on firms that had carried out smaller volumes of transfers, given the lower industry costs overall, and a belief that these firms are more likely to have provided suitable advice (based on the estimated 19% unsuitability rate in CP22/6), so should be less likely to go through supervisory action. Option 3 – enhanced engagement with consumers to encourage complaints
2.40 Several industry respondents, their legal representatives and other law firm
respondents preferred this option and thought the current framework sufficiently ensures that consumers can access redress via complaints to firms, the Financial Ombudsman Service or, if necessary, the courts. A few of these industry respondents also felt that consumers needed to take responsibility for their actions and take steps to become more knowledgeable about the complaints process.
2.41 Industry respondents disagreed that low complaint rates were indicative of BSPS
members not being aware of their right to complain. They referred to the significant amount of publicity this issue had received, public information on the complaints process and direct engagement by the FCA, other regulatory bodies, law firms, CMCs and the press since BSPS restructured in 2018. Option 4 – opt‑in s.404 redress scheme
2.42 A minority of those who gave views on the alternatives (primarily industry respondents
and their representatives), supported this option and thought it would be more proportionate than an opt‑out s.404 scheme. They said that this would be more

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme accurate and targeted in identifying unsuitable advice cases than an opt‑out s.404 scheme. However, it would still reach a significant number of consumers and provide a high level of redress compared to the other alternative options. They also argued an opt‑in s.404 scheme would be more proportionate for firms that carried out lower volumes of transfers.
2.43 Respondents who supported this option took the view that professional indemnity
(PI) insurers were much more likely to accept notifications and cover redress under an opt‑in s.404 scheme, which could reduce the risk of firm insolvency, the impact on FSCS, and the impact for consumers with claims that exceed FSCS compensation limits. One asked why we would not take the same opt‑in approach as with the last s.404 redress scheme we implemented in 2012 concerning Arch Cru.
2.44 A couple of respondents thought the risk that firms would encourage consumers not
to opt‑in could be reduced by firms sending out prescribed letters similar to the FCA’s current PBR approach. A few argued that this approach was widely understood and accepted by both firms and PII insurers. A few suggested that we could write directly to consumers, highlighting the existence of the opt‑in scheme, the steps they can take to seek redress, then following up with any firms who show particularly low take‑up rates. Other options
2.45 A few respondents suggested that we should consider one or more of the following
alternative options:

alternative options for different types of firms or a combination of the other
options we identified, for example an opt‑in s.404 redress scheme alongside greater consumer engagement by us.
drafting letters for firms to send to their customers inviting them to make a complaint
and extending the time limits in FCA rules to give consumers longer to complain. Our response We continue to take the view that a s.404 redress scheme is preferable to alternative options which rely on consumers taking proactive action to complain. As respondents have noted, through communications to all who transferred, a dedicated website page and in‑person and virtual events held with consumers and their representatives we have tried to improve knowledge about how to make a complaint if someone had concerns about the advice they got. However, our research has shown that many consumers who transferred out of BSPS are not considering making a complaint about the advice they were given. Some told us that they felt awkward complaining about a financial decision they took, while others were reluctant to challenge their adviser directly. Others said that they were unsure whether the advice they received was suitable and mistakenly thought that you had to explain why the advice was unsuitable if you make a complaint. If we do not take action, consumers who transferred out might not realise they may have suffered financial loss as a result of unsuitable advice until much later in life when it is likely that they will be time‑barred from making a complaint.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Our supervisory and enforcement work to date has delivered over £20m in redress to consumers. We continue to progress approximately 30 ongoing enforcement investigations into firms and individuals relating wholly or partly to BSPS advice, all of which are at an advanced stage. Two matters are being litigated and are in the public domain. Taking supervisory or enforcement action against all firms that provided BSPS transfer advice would not be practical – it would be costly and would not be an effective use of our limited resources. It would also take time and so could result in delays in consumers getting redress. We do not agree with respondents who suggest that only a narrow range of firms (such as those with higher volumes of transfers) should be targeted by the scheme or by supervisory action. This is because there has been a widespread failure in the market and consumers who took advice from smaller firms should also benefit from having their advice re‑considered by firms in the scheme. We think that an opt‑out scheme is preferable to an opt‑in scheme given the risk that members owed redress may not opt‑in to the review process and eventually become time‑barred from making a complaint. We have evidence that some firms have actively tried to dissuade customers from making complaints. This remains a risk even where consumers receive prescribed letters from their firms under a s.404 redress scheme, for example during any separate discussions they may have with their adviser before formally responding to a decision letter. Our updated CBA estimates indicate that 9% of consumers who receive redress under an opt‑out s.404 scheme would miss out under an opt‑in scheme. We estimate that administrative costs for firms would be £7.9m under an opt‑in approach and £9.3m under an opt‑out approach. A number of steelworkers we engaged with during the consultation period welcomed an opt‑out approach rather than opt‑in approach, as they said they were unsure if the advice they received was suitable and were reluctant to challenge their advisers directly. Under our proposed approach, if consumers are happy with the advice they received, they can opt‑out if they want to do so. Combining multiple alternatives may place an unduly large resource burden on the FCA, while being likely to produce only similar outcomes to a s.404 redress scheme. As outlined in our response above to a s.404 opt‑in approach, we will carry out a comprehensive consumer engagement programme to increase awareness of the scheme. Together with the scheme itself, we believe this will lead to the most positive outcomes, compared to any combination of alternative options. Extending the complaint limitation periods in our DISP rules would not address the risk that large proportions of consumers may continue to not complain about their advice, due to influence from their advisers or other factors.
Consequently, the delays to harmed consumers receiving redress would continue.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme 3 Scope of the scheme
3.1 In CP22/6 we explained who the scheme would and would not cover. In this chapter, we
set out the feedback we received on:

the relevant time period the scheme will cover
insistent clients
categories of people who will not be included in the scheme
The relevant period
3.2 We proposed that, depending on the results of our analysis of further evidence, the
scheme will cover consumers who received advice between 26 May 2016 to 29 March 2018 to transfer out of BSPS. 26 May 2016 is when the DWP launched a consultation on BSPS and 29 March 2018 is when BSPS entered PPF assessment and was closed to transfers. We asked:
Q7: Do you agree that the scheme should cover advice given between 26 May 2016 and 29 March 2018, provided the further file review evidence shows that the legal test is met? Q8: Do you agree that, if the legal tests for the earlier period are not met, the scheme should cover advice given between 1 March 2017 and 29 March 2018?
3.3 For Q7, just over a third (35%) of respondents agreed that the scheme should cover
the wider period if the legal test is met. A similar proportion disagreed or were neutral on the subject. Therefore, there was no real consensus in the consultation responses. For Q8, more respondents agreed than disagreed that if the legal tests for the earlier period were not met, the scheme should cover advice given between 1 March 2017 and 29 March 2018.
3.4 Many consumers and their representatives suggested that we should extend the limits
in FCA rules for BSPS consumers to give them more time to complain. Our response We have completed a review of a sample of 20 additional client files for the period 26 May 2016 to 28 February 2017 (inclusive of both dates). Our statistician has analysed the results and advised that the earlier time period is not significantly different from the main period. Including the earlier period does not change the previous conclusion that 46% of the transfers across the whole population involved unsuitable advice. When the earlier time period is considered in isolation, the rate of unsuitable advice is estimated to be higher than 46%.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme We have implemented the rules that we consulted on so the scheme will cover consumers who received advice between 26 May 2016 to 29 March 2018 to transfer out of BSPS. It is possible that the time limits for bringing a claim may have expired for some consumers who received advice in 2016. Firms will be required to consider whether a consumer is out of time, and if they are, to send the consumer a letter explaining why they are excluded from the scheme and giving them the option to refer the matter to the Financial Ombudsman Service. Insistent clients
3.5 Insistent clients are consumers who are advised not to transfer but who transfer
anyway with the help of the firm who advised against the transfer. We asked:
Q9: Do you agree with the steps we propose for insistent clients? Q10: Do you have any evidence of harm caused by DB advice firms to insistent clients who transferred out of BSPS?
3.6 For Q9, most respondents (60%) agreed with the steps we proposed for insistent
clients. For Q10, almost all (85%) said that they did not have evidence of harm caused by DB advice firms to insistent clients who transferred out of BSPS.
3.7 Most industry respondents agreed with our proposal that insistent clients should be
excluded from the scheme. Many thought that firms would have followed procedures correctly to ensure consumers were not wrongly classified as insistent. Consumer respondents told us that it was important that people were told if they had been classified as insistent and understand they can complain to the Financial Ombudsman Service if they do not agree with the classification.
3.8 Some consumer respondents suggested that we should review all insistent client
cases to check that the customer had been correctly classified. This could help to identify cases where the customers were not told of the relevant risk warnings or important information when rejecting the advice.
3.9 On the other hand, some industry respondents said that consumers should not be
encouraged to complain if they are outside the scope of the scheme and should not have the right to complain to the Financial Ombudsman Service about being treated as insistent. Some respondents suggested that the FCA rather than the Financial Ombudsman Service should decide whether the firm has complied with insistent client procedures. This is because that decision is a matter of fact, and not a decision to be based on what the Financial Ombudsman Service thinks is fair and reasonable.
3.10 A few respondents said they had evidence of harm caused to insistent clients by
advice firms and raised concerns that some firms may have incorrectly categorised consumers to avoid liability for unsuitable transfers.

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3.11 Some firms said that they do not do transfers for insistent clients, that insurers refuse to
cover such transfers and that a transfer that the firm has advised against is unlikely to be in the client’s best interest. Some respondents also said that the Financial Ombudsman Service took a different approach from the FCA to insistent clients and was likely to uphold complaints about unsuitable transfers even if clients were insistent. Our response We remain of the view that the evidence is insufficient to justify including insistent clients in the scope of the redress scheme. As we stated in the consultation, the number of insistent client cases is likely to be small and concentrated in firms that are either insolvent or under enforcement investigation by us. If people feel that they have been incorrectly categorised as insistent clients, they can complain to the Financial Ombudsman Service. If cases are referred to the Financial Ombudsman Service, they will consider whether the firm has correctly determined that the case is out of scope under the scheme rules, rather than on the basis of what is fair and reasonable. We acknowledge concerns raised by several respondents that firms might have classified consumers as insistent when they were not actually insistent. For example, if the consumer did not properly understand the risks of transfer and/or that the advice was not to transfer. We will carefully monitor firm compliance with our rules to ensure that consumers are not incorrectly classified as insistent. We will also require firms to provide us with data on the number of people who are excluded from the scheme and the reason(s) why, to inform our supervisory activities. Exclusions
3.12 As well as insistent clients and BSPS members who received advice outside the
relevant period, in CP22/6 we also proposed to exclude people who:

have already received redress
have referred their complaint to the Financial Ombudsman Service
have received a final outcome from a suitability assessment on their case through a
specified PBR
3.13 We asked:
Q11: Do you agree that the scheme should exclude cases in the circumstance we have described above?
3.14 Most respondents (70%) agreed with our proposals to exclude cases in these
circumstances. Several industry respondents highlighted that those offered redress following a complaint would have been told they could refer their complaint to the Financial Ombudsman Service if they had concerns about the firm’s offer. Those who have taken their case to the Financial Ombudsman Service have already received an independent review of their transfer from an independent body.

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3.15 Some consumer respondents told us that, due to issues that have been identified with
redress calculations, steelworkers who had already received redress should not be excluded from the scheme.
3.16 Some firm respondents suggested that we should also exclude cases where firms had
carried out proactive PBRs and appointed an independent third party to review the advice, where referral rights were provided to the consumer.
3.17 Some respondents said that we should not exclude people who had referred
complaints to the Financial Ombudsman Service in case the outcome reached might be different under the scheme rules. Others said that consumers who had received compensation from FSCS but whose losses exceeded FSCS limits should also be included in the scheme. Our response We remain of the view that it would not be proportionate or appropriate to include the following categories of people in the scheme; people who:

have accepted redress (from the firm or from FSCS)
have referred their complaint to the Financial Ombudsman Service
have received a final outcome from a suitability assessment on their
case through a specified PBR where the firms has appointed a skilled person to carry out the review. As acknowledged by some respondents, those who have received redress have had the harm that they suffered put right. They will also have been told they could refer their complaint to the Financial Ombudsman Service if they had concerns about the firm’s offer. We have seen evidence of a small number of firms not accurately calculating redress which may have resulted in consumers receiving less than they should have. Where we identify issues, we will take action, such as instructing skilled persons to ensure calculations are completed correctly. We have also published two updates in September 2021 and October 2022 to remind firms of our expectations including how we expect firms to take into account adviser charges when calculating redress. We will continue to closely monitor firms, taking further action where appropriate. Consumers who have referred complaints to the Financial Ombudsman Service have already had, or are in the process of having, their cases considered by an independent third party with the power to make binding decisions on firms. Consumers can ask for the matter to be reviewed by an Ombudsman if they disagree with the initial assessment reached. The firm will also have paid a case fee for the Financial Ombudsman Service to consider the case so it would not be proportionate for them to incur additional costs under the scheme rules.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Customers will be excluded from the scheme if they have had their advice reviewed in a past business reviews carried out by a skilled person where the firms has assessed the advice using the FCA DBAAT and notified the consumer that they can complain to the Financial Ombudsman Service if they disagree with the findings. We do not think it would be appropriate to exclude customers from the scheme where firms have appointed other third parties to review cases because there is a risk that some consumers may not have received the right outcomes. However, where a DBAAT has already been completed, the rules enable firms to confirm that the same outcome would have been reached if the firm had assessed the case in accordance with the scheme rules. If firms consider that it would be unduly burdensome for them to comply with the scheme rules, they can consider applying for a waiver.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme 4 Scheme steps, suitability assessments, and oversight
4.1 In CP22/6 we set out the steps firms would have to follow to carry out the scheme
and proposed deadlines for those steps. We described the role of the BSPS DBAAT. We also set out how we intended to oversee the scheme to ensure that consumers received fair outcomes. In this chapter, we summarise the feedback we received on the scheme steps and deadlines, the BSPS DBAAT and oversight of the scheme. We also set out our response to that feedback. The scheme steps and deadlines
4.2 We proposed that firms would carry out certain steps to identify cases that are within
scope of the scheme, assess those cases and communicate the outcomes of their assessments. We proposed deadlines by which firms must complete the steps and the information that firms would need to report to us.
4.3 We asked:
Q14: Do you agree with the proposed steps for firms to take under the scheme? Q15: Do you agree with the proposed deadlines in the draft rules for firms completing the steps of the scheme? Scheme steps overall
4.4 For Q14, almost half (47%) of respondents disagreed with the proposed steps for firms
to take under the scheme. However, almost half (49%) of respondents agreed with the proposed deadlines in the draft rules for firms to complete the steps of the scheme.
4.5 Some respondents said that if we introduce a redress scheme, the proposed
steps would be generally appropriate. However, many firm respondents and their representatives had concerns about the BSPS DBAAT and our proposals to assist consumers to refer cases assessed as suitable to the Financial Ombudsman Service. We address the feedback on these aspects later in this chapter.
4.6 Several respondents qualified their agreement with the steps by reiterating comments
previously made on our justification for an opt‑out s404 redress scheme (which we addressed in Chapter 2). For example:

a few believed an opt‑out process would mean that consumers are complaining
without being aware that they are doing so.
others believed some consumers might view redress as ‘free money’ and may not
realise the impact that spurious complaints can have on advisers (such as increased insolvency risk, time and burden on firms).

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several recommended that we should not compel firms to take any steps that
would invalidate their PII cover without their insurers’ consent. Scheme deadlines
4.7 Some consumer respondents felt that firms should complete the scheme steps as
quickly as possible. Some industry respondents said that they thought the deadlines for assessing suitability and calculating redress were too short, particularly if firms needed to request further information from third parties for consumers. Others said that it could be difficult for firms to meet the deadlines if they had many other duties to perform and clients to serve during this time. Some respondents thought that firms might make mistakes if they were not given sufficient time to complete the scheme steps. A few respondents suggested that firms should be given more flexibility in certain circumstances, for example if cases are referred to the Financial Ombudsman Service and then passed back to the firm. Stage 1 – Pre‑scheme checks and Stage 2 – Suitability Assessments (case review)
4.8 Some respondents thought firms should be given longer to complete suitability
assessments. A few respondents asked what would happen if firms received opt outs from consumers during the scheme. One respondent suggested that consumers should be given longer to respond, for example they might miss the deadline because they are on holiday. Stage 3 – assessment outcomes (calculating and paying redress)
4.9 Responses to the proposal that redress must be paid within 28 days said:
it would be impractical for some firms;
some firms would need to wait for their PII providers to pay out, and
small firms were more likely to become insolvent if not given more time to pay
redress.
4.10 One respondent said that we should give firms longer to pay redress. One suggested
60 days would be preferrable to 28. Another noted that our rules do not require firms to follow‑up with consumers if they do not receive a response to the redress offer. The scheme implementation period
4.11 We proposed that the scheme rules will come into effect 3 months after they are
made. This is to give firms time to prepare to ensure they are able to carry out the scheme steps when the rules come into effect. We asked:
Q18: Do you agree with the proposed implementation period?
4.12 Most respondents were neutral on this topic. Among those who gave a view, a majority
were supportive of the proposed timeframe. The consensus view was that they believed it is important above all for the parties involved that the matter is resolved as quickly as possible. However, some cautioned that we should avoid any rushing which might lead to mistakes in the redress scheme or redress methodology’s design

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme and implementation. This could create further uncertainty, cause undue costs or lead to otherwise unsatisfactory outcomes for advice firms, consumers and other stakeholders.
4.13 Some industry respondents highlighted the need for the FCA, the Financial
Ombudsman and the FSCS to ensure that there is sufficient resource in place to ensure the scheme functions well and does not create delays for consumers or other issues which could impede its aims and objectives.
4.14 Respondents of various types thought the 3‑month period seemed reasonable and
achievable for firms to meet, allowing sufficient time for firms to prepare while also being fair to consumers. A few suggested the timeframe was especially reasonable given the prominence of BSPS in media commentary and Parliamentary discussions, as well as the concern over the years shown by the FCA, other regulatory bodies and stakeholders about the quality of advice provided to members. These responses typically said that given this widespread stakeholder attention, all firms should be aware of and prepared for the need to review past advice to members, be it through a redress scheme or handling individual consumer complaints.
4.15 A minority challenged the proposed timeframe. A few commented that because
they do not agree with the scheme, by extension they cannot agree with the implementation period. A similar number thought the timeframe was slightly too short, believing an extra 1‑3 months might give firms sufficient time to prepare, without explaining why.
4.16 In contrast, a larger number felt the implementation period might need extending
if certain key issues arise, such as delays in designing, building and user testing a redress calculator, as first proposed in CP22/6. Some said getting the BSPS calculator right was especially important given the updated redress methodology proposed in CP22/15, and any changes that might be required following that CP. A few suggested that amending the DBAAT might also need extra time if significant issues are identified between now and any final scheme implementation date (for instance through feedback received to CP22/6). One asked why ongoing BSPS complaints currently with firms or the Financial Ombudsman are not put on hold pending the outcome of our redress scheme and redress calculation methodology consultations.
4.17 One respondent claimed that the apparent 1‑year period between when we published
CP22/6 (31 March 2022) and when the scheme would come into force means that firms’ PII policies would have already come up for renewal. New policies would exclude BSPS liabilities, with consequent risks to firms’ solvency. Our response Later in this chapter we address the feedback on the BSPS DBAAT that firms must use for suitability assessments, as well as the role of the Financial Ombudsman. We address how we have considered PII‑related risks to the scheme in our scheme step design amendments below, as well as in Chapter 6 where we address feedback in relation to our CBA. Below we address by scheme stage the feedback received on the scheme steps, deadlines and implementation period, including where we have made changes:

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Implementation period and stage 1 – pre‑scheme checks We propose to implement the rules we consulted on so that the first step involves firms preparing for the scheme for 3 months. Making the scheme rules has stopped the clock for limitation (time limit) purposes. This means that firms are required to review advice given to consumers even if the time limits for making a complaint or claim run out after the scheme starts. Firms have 3 months from date of this publication to prepare for the scheme steps, which they must start from 28 February 2023. The rules for Stage 1 that we consulted on required firms to identify scheme cases, write to consumers in and out of the scheme and acknowledge any opt‑outs they receive within 1 month of the scheme effective date. Consumers can opt‑out at any stage, including after Stage

Firms should acknowledge opt‑outs within 5 business days of receipt.
Stage 2 – suitability assessments
We agree that in some circumstances firms might find it difficult to get the information they need to complete suitability assessments. We also agree that in some circumstances consumers might find it difficult to get the information they are asked for. So we are introducing a new requirement for firms to obtain consent from consumers so that they can get information from third parties on the consumer’s behalf (if further information is required). Consumers can also opt to provide consent for FSCS to contact third parties on their behalf to request information if the firm becomes insolvent at a later date. Our rules require the firm to send a chaser letter to their consumer where they receive no response to a first letter asking for further information needed to assess the consumer’s case. While some considered the 14‑day window for consumers to refuse permission for their details to be passed to the FCA was too short, consumers will still be able to opt‑out of us contacting them to ask if they would like their complaint to be referred to the Financial Ombudsman. Ultimately it will be up to the consumer whether they wish to refer a complaint to the Financial Ombudsman Service. Stage 3 – assessment outcomes We note some firms’ concerns that they may struggle to meet their liabilities if they all occur at a similar time. In March 2020 we wrote to all firms that provided BSPS transfer advice reminding them that firms must have adequate financial resources. Our Principles and prudential rules require firms to have financial resources that are appropriate for the risk of harm and complexity of their business to ensure they can meet liabilities as they fall due. These liabilities may result from claims for poor advice. Firms must meet the Principles for Businesses (PRIN). PRIN includes maintaining adequate financial resources (see Principle 4 – Financial prudence in PRIN 2.1.1). Firms may also have specific prudential requirements that apply to them, including being required to have adequate PII.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme We reminded firms in this letter that if they did not have adequate financial and/or non‑financial resources, they must notify us immediately and, if necessary, seek the advice of an insolvency professional. Firms should also consider their duties under the Companies Act 2006 and the Insolvency Act 1986. Where the firm issues a redress offer to the consumer, we have added a requirement for firms to send a chaser letter after 4 weeks if they do not receive a response to the initial offer letter. We will monitor firm progress with the scheme via reporting requirements which will require firms to confirm to us that redress has been paid and how much. Firms can apply for a waiver if they think they will be unable to comply with the timeframes set out in the rules. All stages To ensure that firms are still able to meet the deadlines for scheme steps where a consumer refers a complaint about a redress determination to the Financial Ombudsman Service, we have introduced a new provision in the rules. This stops the clock on scheme deadlines when cases are referred to the Financial Ombudsman. Time stops on the date the redress determination is sent. Once the Financial Ombudsman reaches a decision and communicates this to the firm or if the complaint is resolved between the firm and the consumer, the clock will then restart if the decision requires the firm to continue to progress the case as a scheme case. We have made minor changes to headings and wording in the main text of some of the letters that firms are required to send to consumers. We are also amending the scheme letter requirements so that only those letters which are ‘redress determinations’ include Financial Ombudsman Service referral rights. We have included new guidance in the rules explaining that the scheme letters can be adapted as necessary when another party is carrying out the scheme steps on the firm’s behalf, for example a ‘competent person.’ Where information requests are sent to a third party, a reasonable time for the response has been set at 4 weeks. If there has been no response after this, the firm requesting the information can notify the FCA if the third party is an authorised firm. We have also amended the rules to ensure that they are more compatible with any potential PII cover that might still be available:

to reduce the risk of firms invalidating PII policies while carrying out
the scheme steps, our rules now allow for the steps to be carried out by the firm’s insurer acting on the firm’s behalf
where a consumer accepts the redress offer made by their firm, the
acceptance letter text is now amended to make this more expressly a valid ‘claim’ under most PII policies.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme We have introduced specific guidance on how firms should carry out the scheme steps where a consumer has died. Firms should take reasonable steps to reach out and engage with the deceased’s estate/beneficiaries of the pension and estate when carrying out the steps. We do not intend to extend the scheme deadlines for determining whether cases are in scope, assessments are suitable, or paying consumers once a redress offer is accepted. If there are exceptional circumstances that mean firms cannot complete the required steps within the deadlines they can apply to us for a waiver or discuss with the firm’s relevant supervisor. Following consideration of responses, we have decided to extend the deadline for firms to calculate redress under the scheme if the consumer requests augmentation or asks the firm to consider. This is to ensure that the firm has sufficient time to collect the information that it needs to calculate the augmentation offer or other losses. Please see Chapter 5 for further information about this and other deadlines for calculating and paying redress under the scheme rules. Putting cases on hold We do not think it is appropriate for firms or the Financial Ombudsman Service to put cases on hold until we have confirmed changes to the redress methodology. We understand that consulting on changes to our methodology while redress calculations continue could make some people uncertain about when to have their redress calculated. We therefore gave everyone the option to wait until we have made any changes to the methodology to have their redress calculated. We explained that consumers should not wait to have redress calculated just because of the changes in the economy. We are confident that our methodology is appropriately factoring in economic change. The BSPS DBAAT and the examples of unsuitability
4.18 We proposed that suitability will be assessed using a BSPS‑specific version of the
DBAAT we created in 2019, which has been used widely and which we consider to be a robust tool for assessing advice.
4.19 We proposed that the instructions would require the assessor to be familiar with the
risks of a pension transfer out of BSPS, and to answer the questions in the template with reference to available evidence. During the TTC period, members could stay in the current BSPS DB scheme, which would move into the PPF; or join the new BSPS DB scheme (BSPS2). Consumer also had the right to transfer out.
4.20 We published an annex to the instructions which outlined the general features of DB
schemes, the risks associated with DB transfers, a comparison of the key benefits available in BSPS2 and the PPF, and a timeline of the key announcements relevant to BSPS. The annex also provides guidance on what information was available and when during the timeline. The information section of the BSPS DBAAT requires firms to check whether the required information was gathered to inform the transfer advice.

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4.21 The proposed suitability section required the assessor to record the available
evidence and information in the information section. It also required the assessor to consider a list of examples that indicate advice is likely to have been unsuitable. The assessor had to conclude, considering all the available evidence and presence of any examples indicating unsuitable advice, whether the advice complied with the suitability requirements.
4.22 We proposed that if the assessor concluded the advice failed to comply with the
suitability requirements, then the causation section of the BSPS DBAAT had to be completed. The causation section recorded the assessment of whether the advice was the effective cause of the consumer’s decision to transfer and had (or might have) caused loss.
4.23 We asked:
Q12: Do you agree that the BSPS DBAAT is an appropriate tool for assessing whether advice to transfer out of BSPS was suitable? Q13: Do you agree that the examples of failures we’ve identified in the BSPS DBAAT instructions are indications of a failure to comply with suitability requirements?
4.24 For Q12, almost two thirds (63%) of respondents disagreed that the BSPS DBAAT is
an appropriate tool for assessing whether advice to transfer out of BSPS was suitable. For Q13, almost half (49%) of respondents disagreed that the examples of failures we identified in the BSPS DBAAT instructions were indications of a failure to comply with suitability requirements.
4.25 Several respondents said the BSPS DBAAT was a useful tool to guide the assessor
through collating the information needed to assess the suitability of advice. However, many said it was not appropriate for carrying out the assessment itself. It was suggested that it is inherently biased, uses closed questions, does not take proper account of ‘soft facts’, and does not consider other factors relevant to the suitability of advice. Some also asked for more guidance or clarity on certain parts of the tool. Inherent bias
4.26 Some respondents said the proposed BSPS DBAAT was biased as it was more likely to
produce an outcome of ‘unsuitable’ than ‘suitable’. They believed this was because the proposed BSPS DBAAT provides examples of unsuitable advice but does not provide examples of suitable advice and the questions asked are closed questions.
4.27 Some said the DBAAT didn’t give sufficient space for assessors to explain their
rationale. Others stated that some of the examples of unsuitability could also be examples of suitability. Another said that the examples mean potentially every file is likely to be unsuitable.
4.28 One respondent said that the DBAAT holds advisers to a higher standard than the
typical test for legal liability. They argued that advice does not need to be perfect but be reasonably given and that the DBAAT will produce a result of unsuitable if any question is answered in the negative. Some also viewed the DBAAT as giving minor compliance issues the same weight as the key drivers behind a transfer.

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4.29 Some said that the DBAAT is procedurally unfair because it doesn’t involve any
communication with clients or firms.
Our response
Purpose of the DBAAT, purported bias and advisers’ obligations
Section 404A (s.404A) of FSMA specifies the types of rules that the FCA
may make in relation to a s.404 redress scheme. These rules include:

s.404A(1)(b): ‘setting out, in relation to any specified description of
case, examples of things done, or omitted to be done, that are to be regarded as constituting a failure to comply with a requirement’
s.404(1)(c): ‘setting out … matters to be taken into account, or steps
to be taken, by relevant firms for the purpose of (i) assessing evidence as to a failure to comply with a requirement; or (ii) determining whether such a failure has caused (or may cause) loss or damage to consumers As such, the BSPS DBAAT does not focus on examples of ‘suitable’ advice, because firms are required to assess whether their advice was non‑compliant with the requirement in COBS 9.2.1R(1) – to take reasonable steps to ensure that the advice is suitable. We recently published some guidance to help firms understand how to apply our Handbook rules and guidance when giving DB transfer advice. This guidance includes examples of ‘good’ and ‘poor’ practice, largely based on advice we have assessed, to illustrate our expectations and how they link to compliance with our rules. We recognise that parts of the guidance reflect rule changes we have put in place since firms gave advice to BSPS members. But it still provides a useful steer on how we expect firms to give suitable advice. ‘Scoring’ and weighting are not features of the BSPS DBAAT. Where one or more examples of unsuitability are ticked, this will lead to the DBAAT suggesting a ‘potentially unsuitable’ rating. However, this is only a suggestion/indicator. The DBAAT acts to assist the assessor in considering all the relevant factors when assessing the suitability of the advice. While it asks closed questions and requests factual information, it does not prevent the assessor from considering other information when determining the outcome. The DBAAT does not produce the assessment outcome. Instead, it is for the assessor to review the case in the round, including the example(s) present and the wider information and circumstances, to form a view on suitability. Communications with stakeholders during FCA case assessments When we conduct a suitability assessment using the DBAAT, we speak to the firm at the outset so the firm can provide all the evidence that it holds to support the recommendation. We assess suitability on the evidence the firm provides. We are assessing whether firms have complied with our rules. The onus is on firms to demonstrate the suitability of their advice, as outlined in COBS 9 and COBS 19. The DBAAT is designed to focus on the information the adviser knew

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4.30 Some respondents said the DBAAT asked closed yes/no questions which did not
allow for shades of grey. Some said the DBAAT failed to allow assessors to weigh different factors against each other and that it encouraged assessors to consider the examples simplistically in isolation from the consumer’s broader needs, priorities and circumstances. In particular, some said that if an assessor answered ‘yes’ to one example of unsuitability then the outcome would be deemed ‘unsuitable’. These respondents said this was neither accurate nor fair, in cases where there may be other mitigating circumstances or factors.
4.31 The most common criticism of the proposed DBAAT was that it was not nuanced
enough to produce the right result. Some said it was a good starting point but should not provide the definitive assessment outcome. Respondents mentioned the importance of judgement, ‘soft facts’ and the ‘human element’. One said the attestation doesn’t allow for any deviation from the rules and so will encourage a formulaic approach to the DBAAT.
4.32 Some said that the DBAAT assesses suitability based on the loss of guaranteed
benefits alone. They argued that while this might be the primary factor to consider, it should not be the only factor.
4.33 Some said the DBAAT doesn’t capture the client’s objective, which in many cases
was to retire early. They said the objective of retiring early isn’t always evident from ‘hard‑file information’ and so might not be sufficiently considered. Our response The DBAAT serves as a summary record of the file and a prompt to the assessor. It is designed so that it does not itself determine whether the advice was suitable or unsuitable. This is always for the assessor to conclude. Although the DBAAT requests certain hard facts, it does not prevent the assessor from considering other information, be it ‘soft facts’ or other factors. The proposed BSPS DBAAT’s instructions say that an assessor should take the examples of unsuitability into account, but not that these would themselves necessarily determine overall suitability of the advice. At 9.3G they state that: ‘If an example is present, this will tend to show the firm’s compliance or non‑compliance with the suitability requirements. There may be other factors which mean that the firm has, despite the presence of the example, complied, or not complied, with the suitability requirements.’ In other words, the DBAAT relies on examples as strong evidence or illustrations of unsuitability, but those examples are not determinative of the outcome.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme The DBAAT intentionally provides space throughout for assessors to provide additional comments from the file which are relevant to the assessment. This enables assessors to draw on that evidence when completing the DBAAT and to include it in their rationale for the suitability rating. This evidence is necessary to justify the rating, particularly in situations where the assessor’s suitability rating differs from the suggested suitability rating. For each example of unsuitability in the BSPS DBAAT, the instructions set out steps for the assessor to consider. Many of the factors which respondents said did not feature in the DBAAT are explicitly factored into the instructions for working through the examples. We have added guidance to the final Handbook text to clarify the level of detail that assessors should ensure they enter on the DBAAT. We consider that the BSPS DBAAT does provide the assessor with room for a balanced consideration, in light of the specific client’s needs, objectives and circumstances, of the benefits and drawbacks of safeguarded benefits (provided by BSPS2 and/or the PPF) against the benefits and drawbacks of a transfer to a DC scheme. However, this assessment needs to be balanced and should not over‑emphasise the benefits of one course of action, for example transferring out of a DB pension, whilst downplaying the disadvantages, such as the loss of a guaranteed income for life. The DBAAT helps to ensure consistency of outcome in the assessment process and therefore consistency of outcome for consumers. It also mitigates the risk that different assessors reach different conclusions. Hindsight
4.34 Some respondents claimed that the DBAAT was informed by hindsight and so applied
a different suitability test than would have applied at the time of the advice. Some suggested that we had changed our stance on whether a transfer was unlikely to be, or on balance could be, in the client’s best interests. Some said that much of the information that was relevant in a holistic context was introduced later on.
4.35 One respondent said that certain DBAAT areas ask for data in relation to COBS rules
that came into effect after BSPS advice was given. They said that, for example, rules on client attitude to transfer risk (COBS 19.1.6G(4)(b)), expected expenditure throughout retirement (COBS 19.1.6.G (4)(d)), and realistic retirement income needs were introduced on 1 April 2018.
4.36 Some suggested that the PPF should be the comparator scheme, and that the DBAAT
should not consider BSPS2 benefits or critical yield because BSPS2 did not exist at the time. They said that information in the ‘Time to Choose document’ could not be relied upon because it was only a ‘proposal’, subject to change and might not have proceeded. They also noted that a trust deed and rules for BSPS2 were not available to advisers at the time.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Our response Our view remains that keeping safeguarded benefits will be in the best interests of most consumers. In CP17/16, we did consult on whether to remove the guidance in COBS 19 on the starting assumption that a transfer would be unsuitable and replace it with a statement in the Handbook that for most people, retaining safeguarded benefits will likely be in consumers best interests. We also consulted on including guidance that advisers should have regard to this statement. However, in PS18/6 we clarified that we had decided not to proceed with this change, given the significant proportion of unsuitable advice we were seeing at the time. As a result, the starting presumption of unsuitability has remained in the Handbook consistently since November 2007. As we said in CP22/6, and when we created the BSPS DBAAT, we have been careful to ensure that we are not being retrospective in applying our rules. The rules and guidance that apply to DB transfer advice are primarily found in COBS 9 and COBS 19 within our Handbook. We took particular care with the BSPS DBAAT to reflect the rules and guidance in COBS 9 and COBS 19 that were in place at the time the advice was given. Although the COBS 19 rules subsequently changed between 2018 and 2020, the underlying rules in COBS 9 have remained broadly unchanged for this type of advice. Furthermore, the language used in COBS 9 is framed in the context of the ‘specific transaction’ which in this case involves advice to give up safeguarded benefits. For example, COBS 9.2.2R(1)(b) states the firm should have reasonable basis for believing that the specific transaction recommended is such that the client is able financially to bear any investment related risks consistent with their investment objectives. Further, COBS 9.2.2R(3) clarifies that firms should collect information about the client’s financial situation, including source and extent of regular income, assets, liquid assets, investments and real property and the client’s regular financial commitments. We have also been careful to consider what information was available to advisers at the time they provided advice. The report from Grant Thornton, which we published on our website, analysed the information available to firms during the TTC period. It set out the steps that a competent and reasonable adviser should have taken at the time when advising BSPS members. The BSPS DBAAT instructions say what comparator scheme should have been used at various dates. Normally the comparator scheme is the ceding scheme, but the closure of the original BSPS scheme (Old BSPS) complicates this comparison. We have taken a view that for advice given on or before 16 May 2017, the comparator should have been the Old BSPS. This is because before this date, we do not consider there was sufficient reason to believe the Old BSPS was certain to cease existing. Between 17 May 2017
and 11 October 2017, we consider the comparator scheme should have been the PPF, as sufficient information was not yet available on the benefits under BSPS2. From 11 October 2017, when the TTC packs were provided, we consider the comparator scheme should have been BSPS2 and the PPF. While some information on the benefits of BSPS2 were still to be confirmed, we consider that a reasonable adviser would have used the information provided in this pack to make the necessary comparison.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme The examples
4.37 One respondent said that most of the examples are not examples of unsuitability but
are material information gaps. The respondent referred to the following line in the example: ‘The aim of the transfer is to maximise death benefits but there is insufficient evidence on the client file to demonstrate why this is in the client’s best interests.’
4.38 The respondent added that maximising death benefits can mean different things. And
maximising death benefits doesn’t equate to a recommendation, but if the assessor answers ‘yes’ here, the suggested rating will be ‘unsuitable’. The assessor can then use judgement about the overall rating, but an inexperienced unqualified assessor will not be equipped to do that.
4.39 Another respondent said the examples are largely irrelevant because they are simply
objectives of the consumer, or statements about an element of the consumer’s risk profile, such as transfer risk. The respondent said the BSPS DBAAT is assessing whether the objectives are in the client’s best interest, when it should be assessing whether the advice is in the client’s best interests.
4.40 A further respondent said the examples in the DBAAT did not show that advisers were
legally liable for consumers’ losses because legal liability only arises if the consumer was unable to bear the risks, even if that fact is only proven after the event. The respondent said the DBAAT instead wrongly tests whether the firm demonstrated at the time of the advice that the consumer was unable to bear the risks.
4.41 One respondent said it would be helpful if we could provide an example or a case with 1
or 2 indicators of unsuitability but overall suitability because ‘the wider view is that if 1 factor is present then the case is unsuitable’. Our response The DBAAT takes an examples‑based approach to assessing suitability. This is consistent with s.404 FSMA. The DBAAT therefore looks for the presence of examples which, in our experience, tend to indicate that the advice was unsuitable. For instance, Example 1 in the BSPS DBAAT is that ‘The client is, or will be, reliant on income from the scheme’. Where Example 1 is present, it would suggest that the client may not have the capacity to lose the income provided by the scheme. We have not received any compelling evidence to suggest that the examples are not actually evidence of unsuitability or fall short of indicating unsuitability. The presence of an example in a particular case indicates that the advice in that case might have been unsuitable. However, the assessor must consider the evidence in the round. In practice, the examples help the assessor to consider relevant factors when assessing suitability. Several examples do refer to consumer objectives, such as Example 2 which refers to passing on death benefits. However, these examples also consider how the adviser has considered this objective when forming their advice. Referring to Example 2, the desire to pass on lump sum death benefits comes with the risks associated with transferring to a DC arrangement. These include the risk of running out of money if withdrawals are too high, investment performance is not what was expected or the

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme client lives longer than anticipated. These examples are present where the firm has not demonstrated that the consumer is able to bear the risk of the transfer that would be needed to meet the client’s objective. The instructions to the BSPS DBAAT include examples of ways in which an assessor might override the presence of an example of unsuitability and assess the case as suitable overall despite the presence of 1 or more examples of unsuitability. This approach is consistent with guidance in COBS 19.1.6G that a firm should start from the position that a transfer will not be suitable for a client, unless the firm can demonstrate based on evidence that, in the case of a particular client, a transfer is in the client’s best interests. Regarding liability, an assessment that advice was unsuitable does not assume that a liability arises. Liability requires a separate assessment. It is determined after the suitability assessment, if the suitability assessment found that the advice was unsuitable. Where an assessor has found that advice was unsuitable, the assessor must then move to determine whether the advice caused the transfer (in the DBAAT’s causation section) and, if it did, whether the transfer caused any loss to the consumer. Whether the advice the firm provided was justified based on the information available to it at the time is relevant to the suitability assessment. The suitability assessment is an assessment of whether, in giving the advice, the firm complied with COBS standards. Whether in fact the consumer was unable to bear the risk of the transfer is likely to be shown as part of establishing the amount of any loss if the advice is found to be non‑compliant with COBS standards and the advice is found to have caused the consumer to transfer. On untrained assessors, the BSPS DBAAT says, ‘Before completing the BSPS DBAAT, an assessor must familiarise themself with the features, benefits and risks of a pension transfer from BSPS, including the features, benefits and risks in general of a pension transfer that a reasonably competent firm should have identified, as illustrated in CONRED 3 Annex 17G at Table 1’. Reliance
4.42 Example 1 is that the consumer is, or will be, reliant on income from the comparator
scheme. Some respondents said it was not clear whether reliance means the consumer will rely on part or all of the DB pension.
4.43 Some respondents said the DBAAT seemed to assume that state pension could not
be relied on as an income source.
4.44 One respondent said that the question of reliance is not whether there is a need for
any of the DB pension income, but whether there is a need for guaranteed income.
4.45 Another respondent said the DBAAT ignores the significance of small income gains
where total income is low. In BSPS cases, the upside motivation may well take the form of earlier retirement.

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4.46 A further respondent disagreed that reliance was relevant at all.
Our response
The purpose of Example 1 is to recognise if a consumer would have been reliant on their guaranteed DB scheme pension to meet their basic inflation‑linked living costs and lifestyle expenditure, given the other assets available to them throughout retirement. DB pension schemes provide a guaranteed income for life, typically with some protection from inflation. This guarantee is lost upon transfer to a DC pension, so a transfer increases the risk that the consumer could run out of money. While there is always the opportunity for a consumer to use a DC pension to ‘purchase’ a guaranteed income for life, via an annuity, often the terms offered, and cost are less favourable than those available in the DB scheme. The instructions that support users of the DBAAT, and that were consulted upon in CP22/6, frame Example 1 in the context of the consumer’s capacity for loss. Example 1 seeks to establish the level of reliance the consumer has on this pension, the possibility that this income may run out and whether the consumer has the capacity to bear such a loss. It is not simply the case that if the client needs to draw any money from this pension, then Example 1 is present. The instructions outline the steps to take to identify whether the example is present. The instructions recognise that the question of reliance depends on multiple factors. These include the consumer’s anticipated expenditure patterns, their health and life expectancy and what other assets, both pension and none pension, they have available. For example, the DBAAT instructions explicitly recognise that many consumers will have access to a state pension which will help to meet their planned retirement expenditure. However, we said in CP22/6 that many BSPS members tended to have few other assets or sources of retirement income in addition to the state pension. This would tend to increase the importance of the BSPS pension as many consumers have few other assets to draw upon. Our view is that there is sufficient detail within the DBAAT instructions to allow firms to consider whether the consumer can produce the same, or similar, contributions to their income needs post transfer and whether such a course of action aligns with the client’s capacity for loss. Guarantees
4.47 Example 7 is that the consumer wants or prefers guaranteed income or returns. Some
respondents said that loss of guaranteed income is a major factor, but if the member had other valid motivations and understood that income was not guaranteed, their short and long‑term objectives should also be considered, and not discounted (for example if a case is referred to the Financial Ombudsman Service). These respondents suggested that the spreadsheet over‑emphasised the significance of guarantees. Some also said that uncertainty over the future of BSPS meant that consumers wanted to transfer out of the scheme to secure benefits. Another respondent said

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme the emphasis on guarantees ignored the fact that consumers value the opportunity to increase their retirement benefits via a transfer and that the value of guarantees has to be considered in the wider context. Our response Our view is that if a consumer has indicated a preference for guarantees or certainty, then this is an example of potentially unsuitable advice to transfer out of a pension scheme that provides such guarantees. However, the presence of an example does not determine suitability. The assessor has the opportunity to weigh this factor against other factors to decide whether, overall, the advice was suitable or unsuitable. For example, while the consumer may have a preference for a guarantee, they may have a significantly reduced life expectancy which may reduce the ultimate value of a guaranteed income for life for that consumer. It would be reasonable for the firm to take into account these factors when completing its assessment. Attitude to risk
4.48 Example 8 is that the consumer does not have the necessary attitude to risk. One
respondent said that if the personal pension does not meet the client’s attitude to risk then they could switch funds after a further assessment to determine suitability based on the revised fund selection, rather than ‘casually deem the file unsuitable’. Our response The BSPS DBAAT focusses solely on the advice to transfer out of the BSPS DB pension. It does not consider the follow‑on investment advice and whether this was suitable. While we recognise that the situation raised by the respondent may occur, that unsuitable investment advice could in some cases be rectified via a fund switch, this is not a situation the scheme is focused upon. The BSPS DBAAT focusses purely on whether the consumer had the necessary attitude to risk to transfer out of a scheme with safeguarded benefits to a DC pension scheme. We do not consider that if the DBAAT is properly used it will or should lead to ‘casual’ determinations. Transfer analysis
4.49 Example 9 is ‘The firm’s transfer analysis does not support a recommendation to
transfer’.
4.50 One respondent said this example focuses only on achieving the same level of benefits
as the BSPS, rather than focussing on individual objectives.
4.51 Some respondents suggested that critical yield should not be considered in the
DBAAT. They noted that we have said in the past that critical yield is just one factor in the assessment of suitability. Some said we had noted the drawbacks of using critical

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme yield. One noted that we removed the requirement to include the critical yield following the introduction of Appropriate Pension Transfer Analysis and the Transfer Value Comparator. Another said that the transfer analysis requires comparison of the critical yield with the Key Features Illustration, but many factors would mean critical yield is irrelevant. They felt we seem to have changed our view about critical yield since 2017.
4.52 Another respondent said the DBAAT wrongly takes into account critical yield for an
annuity but not for drawdown. They said advisers rarely recommended transferring out to an annuity, and the annuity option is a strawman because it is easier to fault than the drawdown option. They said best interests are rarely served by transferring with the intention of buying an annuity and that this would lose the welfare gain that a transfer provides. The respondent noted that Grant Thornton’s report did not suggest that critical yield for drawdown should not form part of advice. The respondent noted that, for a recommendation of transfer‑to‑drawdown, COBS 19.1.3G requires calculating ‘the rates of return that would have to be achieved to replicate the benefits being given up’ and ‘rates of return which take into account the likely expected returns of the assets in which the retail client’s funds will be invested’. They believe that COBS 19.1.3G uses ‘replicate’ ambiguously to cover both the annuity and the drawdown option (even though neither is actually replication). They consider that the DBAAT lacks a section for data on the drawdown option, so it encourages assessors to test on the annuity option. Some respondents told us that they considered that this is the most common basis for the Financial Ombudsman Service to find advice unsuitable.
4.53 One respondent said the transfer analysis should be the first example in the DBAAT
and set the tone for the rest of the assessment. However, they also said the transfer analysis example pushes assessors to use the wrong analysis, producing flawed assessments. The respondent said the DBAAT pushes assessors towards Transfer Value Analysis (TVAS) critical yield calculations to assess better or worse off, but they assume individuals will de‑risk pension investments at retirement by buying an annuity. They suggested our own data on annuity purchases shows that this assumption no longer holds. The respondent considered that cashflow modelling was most effective at showing the value inherent in a transfer but said the Financial Ombudsman Service ignores cashflow modelling on files.
4.54 The respondent said that bias in the DBAAT meant advisers assessing suitability
would have to use the box ‘Commentary on any other comparison of benefits’, and third‑party assessors might not include it at all, and the Financial Ombudsman Service might not take this into account. One respondent said that the Financial Ombudsman Service had a history of ignoring client objectives, suitability reports and file notes.
4.55 One respondent said the DBAAT doesn’t consider the reduction of indexation by
sponsoring employers who moved from the Retail Price Index to the Consumer Price Index or nothing, and capped indexation as low as 2.5% in some cases. Our response The critical yield is the rate of return needed from a DC scheme to replicate the benefits of the DB scheme. Before 1 October 2018 firms were required to produce a transfer analysis and should have determined a critical yield. The rule change in 2018 was a result of, amongst other things, an over‑reliance on critical yields by some firms. The BSPS DBAAT takes into account that the critical yield was still a key part of

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme transfer analysis that firms should have provided to BSPS members. But it is not the sole determinant of whether advice was suitable. The critical yield is a factor in whether the assessor answers ‘yes’ to Example 9. The DBAAT does not prevent assessors from taking into account any critical yield calculated against a drawdown option in addition to the critical yield that assumes purchase of an annuity to replicate benefits. Similarly, if a firm has carried out cashflow modelling showing for example, how long funds may last under drawdown under different investment scenarios, we agree that this is relevant information from the analysis for assessing the suitability of the advice, as set out in the draft DBAAT instructions. Concerns about third party assessors not including reference to other comparisons of benefit (in additional to the critical yield) are unfounded. If the case is referred to the Financial Ombudsman Service after the firm has assessed the advice, it will see the firm’s assessment including any notes on other comparisons of benefit. The Financial Ombudsman Service will not need to complete the DBAAT as it can use the firm’s completed DBAAT. We know that as a result of the restructuring of the scheme, the indexation of benefits was reduced. However, even at reduced levels, indexation still provides an element of protection against inflation, both in deferment and retirement. Such indexation does not exist in DC pensions, where protection from inflation comes through achieving growth in the pension fund, though with the risk that poor markets may mean the consumer is worse off. So our view is that this is a question of whether the consumer is both willing and able to take the risk associated with the transfer and the corresponding loss of indexation benefits. The answer will depend on the circumstances of each individual case. Client knowledge and experience
4.56 Example 10 is ‘The firm did not have a reasonable basis for believing that the consumer
had the necessary knowledge and experience to understand the risks involved in transferring their DB scheme’.
4.57 One respondent said it was important to test for comprehension rather than specific
past experience, and consumers without experience should not be prejudiced.
4.58 One respondent said knowledge and experience are ‘downplayed’ and BSPS members
usually were fully engaged, understood what they were getting and understood the risks.
4.59 Some respondents questioned the importance of knowledge and experience. One
said knowledge should be assessed after the consumer has been informed by the adviser, and experience is not necessary, and every investor is a first‑time investor at some point. The respondent said that what matters is the ability to understand the risk involved in transferring, emotional tolerance, and the need and capacity to take the investment risk.

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4.60 Some said that: Parliament did not intend to prevent consumers exercising transfer
rights if they had no specific experience of transferring a pension or of pension or other investment wrappers. Consumers would gain experience as a consequence of transfer, particularly if it establishes an ongoing relationship with an adviser. Our response The example asks about knowledge and experience needed to be able to understand the risks. It asks whether the firm had a reasonable basis for believing that the consumer would be able to understand the risks involved in transferring. As 1 respondent pointed out, the DBAAT leaves room for judgement. It also takes into account what the firm told the consumer (10.28R(6)(b)) rather than relying on the consumer necessarily having extensive knowledge and experience from the start. Our file reviews found that in 40% of unsuitable cases the client did not appear to have the knowledge and experience to understand the risks of the transfer. In many of these cases, the adviser did not explain the transfer decision giving sufficient balance to the advantages and disadvantages. We also saw many examples of firms failing to correct a material misunderstanding by the consumer. The BSPS DBAAT makes clear that advisers are expected to correct such consumers’ misunderstandings. For example, about the roles of the trustees and employers if the consumer has concerns about belonging to a scheme where the employer would continue being involved. Other misunderstandings which advisers should have corrected involve the level of protection the PPF would have provided, which may still have been adequate to meet many consumers’ needs and objectives. The instructions to the DBAAT direct the assessor to answer ‘yes’ to this example if any of a range of circumstances are present. None of those circumstances requires the consumer to have extensive pre‑existing knowledge and experience. Client age
4.61 Example 11 is based on the client’s age at transfer. It states: ‘the consumer is under 50
and cannot bear the risks of transfer’. Some respondents said the BSPS DBAAT should not include this example. They gave reasons including that: 50 is an arbitrary age; this question is not included in the general (non‑BSPS) DBAAT; BSPS members were more likely than others to want to retire early; younger clients stand to benefit from the longer period of time during which their benefits can be invested in equities; health factors could make age irrelevant; the FCA has assessed advice as suitable where a consumer was in their 20s; and some consumers were offered enhancements of over 200% of their pension while scheme benefits were reduced due to underfunding; and the Chair of Trustees told members in May 2016 that BSPS was highly likely to go into the PPF.
4.62 One respondent said we argue that lack of visibility about retirement needs is more
important than higher outcomes, but advisers were entitled to assess the value clients placed on transfer outcomes without that value depending on contextual information such as a budget. The respondent said, ‘People prefer more to less.’

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Our response When considering what degree of protection for consumers may be appropriate, s.1C(2) of FSMA requires us to have regard to, amongst other things, the differing degrees of risk involved in different kinds of investment or other transaction, and the differing degrees of experience and expertise that different consumers may have. As we said in CP22/6, younger consumers often did not have any clear plans for their retirement, and by transferring, they lose the option to draw a guaranteed income (other than an annuity). A transfer to BSPS2 still ensured consumers kept open all their options. We also note that many individuals further away from drawing their pension may have changes in circumstances that may make scheme benefits more beneficial than at the time advice was given. For example, they may have married and now will benefit from the spouse’s pension. We chose age 50 for the example because our analysis showed that more than 50% of consumers with unsuitable advice were under 50. Further, many BSPS members had a protected pension age of 50, so were unable to access their pension until this age at the earliest. Whilst we acknowledge that future transfer values from BSPS2 may be lower (due to the reduced level of the benefits), this is of little consequence if the consumer ultimately decides they would rather have a guaranteed income throughout their retirement. We also consider that those disadvantaged by transferring out of BSPS might not realise they have suffered a loss until much later in life when it is likely that they will be time‑barred from making a complaint. Transfer values are the expected cost of providing a member’s benefits in the scheme. This will partly depend on the expected returns of the assets held by the scheme. Changes in the BSPS investment strategy meant that transfer values changed over time. Transfer values may also reflect underfunding. BSPS was underfunded but the reduction for underfunding was reduced over time. As with the other examples in the DBAAT, if this example is present and competing or mitigating factors are also present, the assessor can balance those other factors against this example when deciding whether overall the advice was suitable or unsuitable. Causation
4.63 Some respondents pointed out that in some cases consumers might be determined to
follow a particular course of action, irrespective of the advice provided or the process the adviser followed.
4.64 However, 1 respondent said that the most likely reason a consumer would still have
transferred to the proposed scheme ‘in the absence of non‑compliant conduct’ is that the client understood and was persuaded by the case made by the adviser to transfer. The respondent said that any doubt over causation in such cases must be due to the DBAAT introducing errors of both hindsight and logic.

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4.65 One respondent said that a s.404 redress scheme can only be established in relation
to loss or damage that would be actionable in legal proceedings and that this excludes FCA principles and guidance. The respondent said the BSPS DBAAT doesn’t distinguish between legally actionable rule breaches and guidance. Our response We said in CP22/6 that we were proposing not to include insistent clients in the scheme and this position has not changed in the final rules. Our legal analysis is that where a consumer received advice to transfer their BSPS benefits to a DC scheme, and that advice was unsuitable (non‑compliant with COBS 9.2.1R(1)), then the consumer should, in principle, be entitled to recover from the firm the full amount of the loss from that transfer. This is regardless of the actions of other parties, such as introducers, or delays in providing information about a consumer’s options leading up to TTC. The respondent who said that the DBAAT introduces error appears to argue that advice did cause consumers to transfer. The challenges raised to the DBAAT appear to relate more to how it approaches suitability. We have set out in this chapter our response to feedback that alleges certain failings by the BSPS DBAAT. The BSPS DBAAT tests for legally actionable non‑compliance with the FCA rules in place at the time that advice was given to BSPS members. It helps the assessor to decide whether there has been a breach of the key obligations relating to suitability in COBS. In Annex 7 of CP22/6, our King’s Counsel (KC) said that the proposed scheme did not apply COBS rules retrospectively or use hindsight to judge on compliance. Our KC advised that it was a question of fact and expert judgement as to whether reasonable steps were taken in a case, but the legal standards applied by a court or tribunal were clearly set out in the COBS rules in force at the relevant time. Clarifications and guidance
4.66 One respondent said that the notes on how to complete the DBAAT are not clear
enough, so some assessors might interpret them incorrectly. They also suggested that we should produce a series of training videos, offer a helpline for assessors and a published record of questions and answers about the DBAAT. Another respondent said that it might be prudent to keep the BSPS DBAAT under review and fine tune, using feedback from IFAs during the first few months of the scheme.
4.67 Some respondents suggested the following miscellaneous changes that might
improve the DBAAT:

Section 1 should make clear whether the personal details relate to the consumer or
the consumer’s partner
Example 8 should specify whether ‘attitude to risk’ refers to transfer risk,
investment risk, or other risk

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provide more space to fully explain the rationale for the assessment outcome
provide guidance on what to record in the ‘Notes’ fields throughout the BSPS
DBAAT, similar to the guidance on the ‘Additional comments’ fields
clarify what yes/no refers to in response to multi‑part questions
for consistency, change ‘reviewer’ to ‘assessor’
clarify the scoring system, in particular whether examples of unsuitability carry
different weightings
should Examples 1, 5, 6 from 5.42 use ‘existing’ rather than ‘comparator’ (which
could mean destination scheme)?
4.68 Another respondent said we should require all assessments under the scheme to use
the BSPS DBAAT. It said firms could transfer the data from existing DBAATs and add any missing information. Our response We have created comprehensive instructions and notes to support firms to complete the DBAAT. We know there is a risk of poor‑quality assessments if firms either cannot or do not follow the instructions when completing the BSPS DBAAT. Where information is required from a third‑party, the firm can use a letter of authority signed by the consumer and request the information itself. The rules also include a provision to ensure that authorised third parties cooperate with such requests so that the scheme is not unnecessarily delayed. In response to the various suggestions to improve the BSPS DBAAT at paragraph 4.72, we have made a series of minor changes to address some of these points. In Section 1 of the DBAAT, there are separate sections for client details and spouse details. To clarify, the DBAAT does not have a scoring system. Examples are not weighted. The presence of one or more examples simply indicates that the advice might have been unsuitable. Any such examples require the assessor to reach a judgement on suitability of the advice overall. Where we have used the term ‘comparator’, this is the correct term, as set out in the definitions
section of the instructions. Deciding which scheme serves as the
comparator scheme in a particular case depends on the circumstances of that case, for example on the date the advice was given. The BSPS DBAAT sets out at 3.1.1R(6) how to determine which scheme is the comparator scheme for a particular case. On Section 1 of the DBAAT “’as the firm obtained the essential facts about the consumer?’, firms must add the following information into the DBAAT when reviewing cases: 1) client identifier (the same identifier on the RegData return); 2) consumer details including: *consumer name, first line address, second line address, city, postcode, email address; 3) confirmation field that the firm has successfully contacted the consumer. We agree that using the BSPS DBAAT for all assessments under the redress scheme would help to ensure consistent outcomes between firms and consumers. However, we consider it is more proportionate to allow those firms that may have completed an FCA DBAAT before the scheme effective date to use this instead, if it is accompanied by

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme an attestation from a suitably senior individual. This helps to ensure the burden on firms is proportionate to the benefits we expect will flow to consumers through completion of the DBAAT. Associated risks are offset by the attestation, as well as the facilitated referral of ‘suitable’ cases to the Financial Ombudsman Service, which will review the firm’s completed DBAAT during its complaint review process. Independence and oversight
4.69 We proposed that for all cases rated by firms as ‘suitable’, firms must provide details
of these to us so that we can, with the consumer’s permission, contact them to ask if they would like to refer a complaint about the determination to the Financial Ombudsman Service. It will then decide whether the firm has applied the rules of the scheme correctly. We asked:
Q16: Do you agree that we should require firms in the scheme to pass consumer details to the FCA so we can take steps to facilitate referrals to the Financial Ombudsman Service for all cases that are assessed as suitable? Q17: Do you agree that the proposed scheme will provide a proportionate level of independence and oversight?
4.70 For Q16, just over two thirds (70%) of respondents did not agree that we should require
firms in the scheme to pass consumer details to the FCA so we can take steps to facilitate referrals to the Financial Ombudsman Service. For Q17, over half (57%) of respondents did not agree that the proposed scheme will provide a proportionate level of independence and oversight.
4.71 Several respondents said we should not leave firms to ‘mark their own homework’.
However, others disagreed with our proposal to facilitate referral to the Financial Ombudsman Service. Key reasons given for this were that: it unnecessarily undermines trust in firms; is inconsistent with the roles of redress schemes, the FCA and the Financial Ombudsman Service; and it increases the cost of the scheme to firms.
4.72 Some claimed a facilitated referral was unnecessary. They felt it defeats the scheme’s
purpose to help consumers take cases to the Financial Ombudsman Service after the firm has assessed the advice as suitable and we have already made significant effort encouraging consumers to complain. Some said using the DBAAT and the proposed attestation requirement should be enough to ensure that assessments are done correctly. Some said that simply referring all cases to the Financial Ombudsman Service at the outset would be more efficient. Others said that we should simply leave consumers to make referrals if they wish, while some even said that consumers should not have referral rights at all. Another view among some was that firms should have a right of appeal against Financial Ombudsman Service decisions.

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4.73 Respondents concerned about the role of redress schemes, the FCA and Financial
Ombudsman Service said that a redress scheme should be an alternative to the standard complaints process, whereas the proposed scheme merges both. They said that it is not the Financial Ombudsman Service’s role to quality‑assure cases under a redress scheme, and that it cannot consider complaints which are not made by the consumer.
4.74 Related to this, some respondents had concerns about the Financial Ombudsman
Service’s impartiality, capability, knowledge and experience of case handlers to consider cases under the scheme. These respondents typically interpreted, as evidence for this, the Financial Ombudsman Service upholding 98% of BSPS cases at the time of our consultation. Some suggested that assessing cases/suitability should require previous experience of giving DB transfer advice, reviewing DB transfer files and/or having formal qualifications such as a PTS qualification. Some believed that inconsistency in case review outcomes was likely if the Financial Ombudsman Service did not use the DBAAT. Some mentioned specific individual Financial Ombudsman Service decisions which they disagreed with.
4.75 Respondents who focused on costs said that a facilitated referral to the Financial
Ombudsman Service for all ‘suitable’ cases would mean more case fees for firms to pay and delays at an overburdened Financial Ombudsman. Some said firms’ negotiations for PII renewal would be harmed, because insurers would perceive a greater risk if all suitable cases were being referred on. Some mentioned uncertainty for firms, as they would have to wait for confirmation of their redress liabilities. Some asked if we would liaise with PII providers to ensure firms remain covered in future. Several firms thought the Financial Ombudsman Service was likely to uphold 98% of cases under the scheme and claimed this would cause greater firm failure than we estimated in CP22/6.
4.76 Some respondents suggested alternative means for ensuring independent oversight,
such as referring cases to a list of independent skilled persons, recording the interviews carried out by assessors, or the FCA carrying out targeted file reviews.
4.77 Outside of case reviews, some respondents disagreed that a senior manager should
provide an attestation. Some asked us to clarify who must provide the attestation and what this entails in practice. Our response Use of the DBAAT and the proposed attestation to ensure that assessments are done correctly The BSPS DBAAT provides a framework which prompts the assessor to consider relevant factors. However, the DBAAT itself does not determine the outcome of the assessment and so does not negate the need for independent oversight of assessments under the scheme. An attestation, generally, is a firm’s formal statement that it will take, or has taken, an action we require. We use attestations as a supervisory tool to ensure that regulated firms – and senior individuals within them – are clearly accountable for taking the actions we require, often without our ongoing regulatory involvement. The essence of the Senior Managers and Certification Regime is to introduce a duty of responsibility. As with the regime more broadly, we would expect a senior manager in this instance to take reasonable steps to avoid a contravention. What this

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme looks like will depend on the size of the firm, but it need not mean that the senior manager will personally complete each BSPS DBAAT. As with the use of the DBAAT, we do not think the attestation negates the need for independent oversight of a firm’s assessments. Facilitated referral For the same reasons that the redress scheme should be an opt-out scheme, we believe facilitating the referral of ‘suitable’ cases to the Financial Ombudsman Service is appropriate to ensure that consumers do not miss out on any redress they may be owed. We understand why some firms say referring all ‘suitable’ cases for review would defeat the purpose of firms assessing cases in the first place. However, referring all cases to the Financial Ombudsman Service at the outset, without requiring firms to assess advice themselves, would be inconsistent with the Financial Ombudsman Service’s role, and with the statutory requirements for a consumer redress scheme under s.404 FSMA. It would also impose a greater burden on the Financial Ombudsman Service because it would have to assess all cases, not only those that are referred after being assessed as suitable. It would also have to complete the BSPS DBAAT fully without the benefit of the DBAAT completed by the firm. The role of the Financial Ombudsman Service We consider the Financial Ombudsman Service is best placed to provide an independent appeal mechanism when a consumer wishes to complain about a firm’s determination under the scheme. As set out in 1.6.1G of CONRED, complaints will fall in the Financial Ombudsman Service’s compulsory jurisdiction if they are about: acts of omissions of firms where the subject matter falls (or has properly been dealt with) under the redress scheme; or determinations made by a firm under the redress scheme; or firm failure to make a determination under the redress scheme. It is not appropriate for us to comment here on individual case decisions made by the Financial Ombudsman Service. It is operationally independent of the FCA, and we have not seen full details of the cases mentioned by respondents. However, we are satisfied that as the statutory body appointed to made decisions on financial services complaints, the Financial Ombudsman Service is an appropriate decision‑maker to deal with complaints about determinations under the redress scheme for BSPS. The Financial Ombudsman Service decides cases based on what is fair and reasonable in all the circumstances of the case. Under s.404B FSMA the scheme the Financial Ombudsman Service will be bound by scheme rules and will use the BSPS DBAAT. Consistent with CONRED the Financial Ombudsman Service will make decisions under the scheme by reference to what, in their opinion, the determination under the consumer redress scheme should be or should have been (unless both the consumer and firm agree that the scheme rules should not apply to a
particular case.). We worked with the Financial Ombudsman Service during the development of the DBAAT to ensure that we had a

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme consistent view and understanding of its aims and how it should be used. To help ensure consistency under the scheme we will continue to work closely with the Financial Ombudsman Service and the FSCS on the application of the BSPS DBAAT. Qualification of assessors We have chosen to require our own assessors to have PTS qualifications, but we have said that there are no minimum qualification levels for users of the DBAAT. We do not agree that a particular qualification such as the PTS qualification is required for an assessor to make a fair decision on a DB pension transfer case. As a statutory body the Financial Ombudsman Service is subject to scrutiny by Parliament and occasional independent reviews. Reporting requirements We are amending our regular reporting requirements in the scheme rules as our supervisory and data strategy has further developed since publishing CP22/6. For example, we have made changes to clarify how we want firms to provide information to us, such as by aligning the requirements with our RegData return format, as well as the questions and format of the completed DBAAT data that firms will need to report to us. Please see the previous response under ‘Clarifications and guidance’ for more detail on the amended requirements that firms will need to follow when completing the DBAAT and reporting its results to us.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme 5 Calculating and paying redress
5.1 In August 2022, we published CP22/15. This CP set out our proposals for changes to
the general methodology for calculating redress for non‑compliant pension transfer advice and proposals for calculating and paying redress for BSPS scheme cases. We also summarised the responses that we had received to question 19 of CP22/6, which asked:
Q19: Do you have any comments on the high‑level proposals for redress calculations?
5.2 We have published the final rules on the general redress calculation methodology
separately in PS22/13. This chapter summarises the responses that we received to questions 54 to 73 of CP22/15 and our final position for how firms should calculate and pay redress under the BSPS scheme rules. How firms should pay redress
5.3 In CP22/15, we considered different options for how redress could be paid including
through buying deferred annuity products or whether it might be possible for consumers to re‑join the DB scheme they transferred out of. We found that deferred annuity products are currently not readily available, and we explained that we had spoken to the Trustees of both BSPS ceding schemes who had confirmed that reinstatement for these members is not possible.
5.4 So to address concerns about whether the consumers will invest their redress for
retirement, we proposed that firms are required to pay as much redress as possible into the consumer’s DC pension by augmentation, reflecting our approach in the general methodology. We asked:
Q55: Do you agree with our proposal to follow our general approach on the method of payment of redress for BSPS consumers? If not, what alternative approach would you propose?
5.5 Half of respondents disagreed with this approach. A few respondents thought that
we should explore other options that would ensure that BSPS consumers had a guaranteed income in retirement. This included reinstatement into their BSPS DB ceding schemes, a BSPS bulk annuity purchase or a master trust arrangement. One respondent also suggested we use BSPS‑specific assumptions to calculate redress and align the pre‑retirement discount rate to lower risk assets.
5.6 Respondents commented on our proposal to pay as much of consumers’ redress into
their current pension arrangement as part of their feedback on our general redress methodology. We discuss this in detail in chapter 6 of PS22/13. One of the concerns from firms was that calculating the augmentable portion of a payment would use up resources, when consumers are likely to request payment as a lump sum.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Our response In the general methodology we have changed our approach slightly. Instead of requiring firms to calculate the augmentable element for every case, the scheme rules require firms to ask consumers how they would like the redress to be paid. If the consumer would like to review how much redress is payable under both options (lump sum and augmentation) the firm must not charge them for this calculation, even if the consumer ultimately decides not to have their redress augmented. This amended proposal ensures that firms do not incur additional costs in putting together an augmented offer where the consumer is not interested in paying their redress into their pension. But firms can choose to calculate augmented offers without consumers’ consent if they have all the relevant information to do so. In Chapter 2 of PS22/13, we discuss in detail the practical barriers to providing DB transfer redress in the form of guaranteed income products. And we also say that we would not prevent cases being settled with the purchase of an annuity or reinstatement instead of the payment of cash redress if the firm and the consumer are willing to do this. For BSPS, we said in CP22/15 that we established with the trustees that the governing documents for the BSPS2 and the Old British Steel Pension Scheme (OBSPS) do not allow the admission of new members and we have no power to compel the trustees to reinstate members. So reinstatement is not possible for BSPS consumers who transferred out. We also spoke with several insurers about a BSPS bulk annuity purchase. We understand that even if all consumers agree to use their redress monies (estimated at £71.2m under an opt‑out s.404 scheme), it appears it is not viable for insurers to offer a BSPS specific annuity product, unless consumers also agree to move their transferred pension pot. As we said in CP22/15, we have no power to direct consumers to move their transferred pot to another provider or product. So it is unlikely that we would have enough interest from BSPS consumers for an insurer to offer a BSPS insured solution. Our rules do not prevent firms from offering an annuity purchase as a redress solution if they can overcome the practicalities discussed in PS22/13. We discuss the use of BSPS specific assumptions in the ‘BSPS calculation methodology’ section below, and the pre‑retirement discount rate adjustment in Chapter 3 of PS22/13. In Chapter 6 of PS22/13 we also discuss how firms should take reasonable steps to avoid a redress payment affecting consumers’ entitlement to means tested benefits.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Choice of defined benefit scheme
5.7 To calculate redress, firms will need to consider which BSPS scheme a consumer would
have selected if they had not transferred out following unsuitable advice. During the TTC period, 2 possible comparator schemes were available. Members could either choose to stay in the current BSPS DB scheme which would move into the PPF or join the BSPS2. Further, for those members that remained in the “old” BSPS scheme, their legacy benefits may be improved by an uplift over the PPF as they are in the process of being bought out by the Pension Insurance Corporation (PIC).
5.8 We proposed that calculations should only consider 1 comparator scheme if the
consumer made an active selection of BSPS2 or PPF.
5.9 Where there was no active selection of BSPS2 or PPF, we proposed 2 options. Option
1 proposed firms calculate what the redress amount would be for both schemes, and pay the higher amount to the consumer. Option 2 proposed that firms consider information from the time of the transfer advice to see if there is any evidence that the consumer would have been more likely than not to have chosen one of the 2 schemes. Where the firm cannot demonstrate with evidence which scheme the consumer would have been more likely to select, firms should calculate what the redress would be for both and pay the higher amount to the consumer. We asked:
Q57: Do you agree that where the consumer made an active selection of either the BSPS2 or the PPF at the time of the transfer, the redress calculation should be based on the benefits of the selected scheme? If not, what alternative approach would you propose? Q58: Do you agree that where there is no evidence of consumers making an active selection of either the BSPS2 or the PPF at the time of the transfer, firms should calculate what the redress would be for both and pay the higher amount to the consumer? If not, what alternative approach would you propose? Q59: Do you agree that where consumers have not made an active selection, firms should consider information from the time of the transfer advice to see if there is any evidence that demonstrates the consumer would have been more likely than not to have chosen one of the two schemes? If so, what evidence do you consider could help firms demonstrate this? Q60: Do you agree that if the firm cannot demonstrate with evidence which scheme the consumer would have chosen, the calculation should be based on the scheme that provides the higher redress to the consumer?
5.10 A couple of respondents thought the only comparator scheme should be PPF as it was
the only available scheme when most transfer recommendations were made.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
5.11 Most respondents were in favour of selecting the higher paying scheme as the
comparator scheme. Some consultancy firms argued that the higher paying scheme should always be selected, regardless of any evidence on which scheme the consumer would have selected. Some thought this approach would ensure redress is consistent, while 1 firm thought it would reduce firms’ costs for complaints. Respondents not in favour thought there is no basis for simply selecting the highest paying scheme and that this approach applies hindsight to the selection a consumer would have made.
5.12 Most respondents also thought any evidence of a consumer’s active selection should
determine the comparator scheme selection. A few thought that consumers should not be bound by any active selection they made during the TTC consultation because the TTC circumstances meant consumers made misguided choices.
5.13 Most respondents disagreed with firms relying on evidence pointing to the consumer’s
most likely scheme selection. Some respondents wanted clarity on what evidence should be considered, another doubted any definitive evidence would be available which inevitably brings an element of subjectivity when considering evidence. Our response We do not agree that PPF should be the only comparator scheme. We recognise that until BSPS2 became more certain, PPF was the only concrete option available at the time of most transfer advice. But the relevant consideration is the scheme the consumer would have ended up in had they been given suitable advice not to transfer out of BSPS, progressed to the TTC consultation and been given a choice between PPF and BSPS2. We have also revised our approach to the consumers’ active scheme selection being a definitive factor for the comparator scheme selection. This is because it has come to light that consumers were able to change their active selection. So had they received suitable advice to stay in the scheme, a firm may have directed them to change their selection. Consequently, our revised approach is that a scheme selection can be considered as part of the evidence to support which scheme a consumer would have selected, but it should not be considered determinative evidence in isolation. We also considered responses on selecting the highest paying scheme where there is no evidence on file. When we carried out further analysis we found the highest paying scheme is not a sound indicator for determining the scheme consumers that would most likely have gone into. This is because scheme‑specific benefits that would have influenced consumers to choose a scheme do not always result in higher redress, and when they do, they also give higher redress to consumers who may not have relied on these benefits. So in our final rules, we expect firms to use the evidence on file to determine which scheme the consumer would likely have joined and use this scheme as the comparator. We expect however in the vast majority of cases this evidence is unlikely to be in the file. In these cases where there is no evidence on file, BSPS2 should be the ‘default’ comparator.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme This is on the basis that two‑thirds of consumers chose to go into BSPS2 during TTC and the Trustee communications at the time emphasised their desire to secure better benefits (in BSPS2) than those which the PPF would provide. Where a firm relies on evidence on which scheme a consumer would have selected, they are required to consider how the consumer would have weighed some factors against others to select their scheme. For example, the desire to retire early should not be conflated with a view that a consumer would have accepted the 10% pension value reduction that applies to a PPF selection. And the desire to retire early without concrete realisable plans to do so is not reliable evidence that a consumer would have selected PPF. The calculator will require firms to record their justification for any active comparator scheme selection. To help consumers understand and engage with the process, we require that where the scheme selection results in lower redress, firms’ redress offers to consumers will highlight the additional amount the consumers would have been offered if the redress had been calculated using the other comparator scheme. This prompt should help consumers challenge a firm’s justification for selecting the scheme if they find it unfair or refer a complaint to the Financial Ombudsman Service. Our Supervision function will also monitor firms’ justification for their comparator scheme selections to ensure their selections are appropriate and suitable.
5.14 We also proposed that where firms use the PPF as a comparator scheme, consumers
should be redressed based on the upcoming PIC benefits when available. We asked:
Q56: Do you agree that where the PPF is used as the comparator scheme, consumers should be redressed based on the upcoming PIC benefits when available? If not, what alternative approach would you propose?
5.15 While many respondents agreed that redress based on PPF benefits should be
updated to PIC benefits, a few respondents thought it would be wrong to take this position before the PIC benefits are known. One respondent argued that PIC benefits would be different if more consumers had ended up in PPF had they not transferred out following unsuitable advice. They felt this meant that uplifting redress to PIC benefits would not provide the correct redress. Some respondents asked for more clarity on how to process redress calculations until confirmation of the PPF buy‑out by PIC, or when BSPS2 restoration payments are due. Our response With BSPS we know that the ceding schemes’ benefits value have changed or will change: the PIC buy‑out is likely to uplift PPF benefits and BSPS2 has distributed restoration payments. The basis for calculating redress against updated DB benefits is that the consumer would have

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme been affected by these DB benefit changes had they not transferred out of their DB scheme, and redress calculations should take account of these changes. Fair redress should reflect any future DB benefit changes once these are quantified, certain and publicly available. At that point, it becomes a fact that consumers would have been affected in a quantifiable way by these changes had they not transferred out of their DB scheme. The BSPS calculator will be updated to reflect any DB benefit changes. With the PIC uplift, we understand that had more consumers ended up in PPF, the benefits available to PIC members may have looked different. In paragraph 8.22 of CP22/15 we said that there is no practical way of evaluating what PIC benefits would have been if more consumers had ended up in PPF had they not received unsuitable advice to transfer out. Without a suitable counterfactual, we will calculate redress against actual PIC benefits when they are known. BSPS calculation methodology
5.16 We proposed that the calculation methodology for British Steel cases should use the
same assumptions as the general approach. We also set out the BSPS calculation methodology using the general methodology as a basis. We asked:
Q54: Do you agree that, subject to the differences set out in
Chapter 8, the same redress calculation methodology
should be used for British Steel cases as all other cases? If not, what alternative approach would you propose? Q62: Do you agree that the calculation methodology for British Steel cases should use the same assumptions as the general approach? If not, what alternative approach would you propose? Q63: Do you agree with the proposed redress calculation methodology for the British Steel redress scheme? If not, what alternative approach would you propose?
5.17 Most respondents agreed that the BSPS methodology should follow the general
methodology. Some respondents echoed their concerns about our proposed method of redressing consumers. These related to paying redress by augmentation and the need to find a guaranteed income redress solution, and we discussed this in this
chapter’s section ‘How redress should be paid’. A couple of firms objected to the
redress calculation taking into account the value of under‑performing DC schemes where the firm who provided the transfer advice did not provide the investment advice. A few respondents thought that calculations should use a fixed set of BSPS‑specific economic assumptions to level redress among BSPS consumers and give consistency in the amount of redress over time rather than tailoring redress to the latest available economic assumptions. One respondent also thought BSPS should have its own demographic assumptions.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Our response We have updated the Consumer Redress Scheme Sourcebook to combine the scheme rules and the redress rules for the scheme which we consulted on separately. We do not agree that BSPS redress should be calculated with its own set of economical or demographic assumptions. What makes BSPS stand out compared to other cohorts of DB redress cases is the level of unsuitable transfers, calling for the set‑up of a s.404 redress scheme. But there is no justification for calculating redress for BSPS consumers with different assumptions than those set out in the general methodology. Using BSPS specific assumptions would also undermine the objectives of the DB redress calculation methodology of providing fair and consistent redress. The calculation methodology essentially uses various assumptions to calculate the amount required to buy an annuity on retirement to provide the equivalent of the extra pension income consumers lost when they transferred out of their DB scheme. This will depend on the economic situation until that time, and as the economic conditions change, redress calculations done at different times can result in different payments. So this methodology ensures that redress is fair and consistent throughout time, and the amount consumers receive is calculated with the most up to date information at that point in time. Whereas using a fixed set of assumptions would mean that some consumers may be over or under compensated depending on the economic conditions at the time of the calculation. On redress accounting for under‑performing DC investments recommended by a third‑party firm, our view remains that where a consumer received advice to transfer their BSPS benefits to a DC scheme, and that advice was unsuitable, then the consumer should, in principle, be entitled to recover the full amount of the loss from that transfer from the adviser. A recommendation to transfer out of a DB scheme assesses the suitability of giving up guaranteed DB benefits for potentially higher paying DC benefits. A foreseeable risk of such transfer is that the consumer’s resulting DC investment may reduce in value instead, and consistent with how a court would award damages, the redress should cover the full amount of the loss.
5.18 Part 1 of the BSPS methodology relates to the information required for redress
calculations. We proposed that where additional information is needed, firms should get the consumer’s consent to request this from a third party. We asked:
Q61: Do you agree that where further information is needed for a redress calculation, firms should obtain the consumer’s consent to request this from a third party?

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
5.19 All the respondents to this question agreed with this approach. A couple of
respondents raised concerns with third party firms taking a long time to respond to information requests, and the impact this has on firms completing the scheme steps in a timely manner. One firm asked for clarity on whether firms should suspend calculations where consumers have not authorised them to collect information from third parties. Our response We have considered the scheme timelines in Chapter 4 of this paper, where we set out the steps firms must complete in the ‘Implementation Period’ section. In the scheme steps, firms may need to collect information required to assess suitability or calculate redress from the consumer, or get the consumer’s authorisation to collect this information on their behalf from third parties. Where a firm has made reasonable attempts to obtain the information in accordance with the scheme rules but has not been able to, the firm will no longer be required to consider the consumer’s case under the scheme. Where information requests are sent to a third party, a reasonable time for the response has been set at 4 weeks. If there has been no response after this, the firm requesting the information can notify the FCA if the third party is an authorised firm and we will decide on the appropriate follow‑up action on a case‑by‑case basis. We will also be communicating our expectations to third parties ahead of the scheme commencing. On timelines, we have given extra time for firms to complete Stage 3 where a consumer asks them to consider other losses outside of the calculation methodology or gather the required information to calculate an offer by augmentation if the consumer requested it. We also have created a consequential losses claim form to help BSPS consumers notify firms if they feel they have suffered any losses that would not otherwise be considered under the calculation methodology, and give consumers the option to switch their advice firm if they are still in an advice arrangement with the firm who provided the unsuitable transfer advice. If consumers decide to switch to a new adviser, their redress calculation will take account of the compensation for initial advice fees.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
5.20 We also proposed that firms should adjust the redress payment to take account of the
consumer’s tax position and accumulated interest between the valuation date and the payment date. We asked:
Q64: Do you agree with our proposals for adjusting the redress payment to take account of the consumer’s tax position and accumulated interest between the valuation date and payment date? If not, what alternative approach would you propose?
5.21 Most of the respondents agreed. However, 1 respondent disagreed with redress being
subject to tax, and another thought if interest is to be applied, the growth or fall of the underlying DC fund is used to offset any additional interest. Our response On paying interest on redress offer amounts, instead of ‘interest’ our rules now refer to ‘additional compensation amount’ because it describes more accurately that this payment is to compensate for the passage of time between the valuation and the payment date. On taking into account of the DC value fluctuation to offset the additional compensation amount, we discussed this in PS22/13. We consider it to be overly complex in some scenarios, such as where further withdrawals have been made from the pension, or impractical where the fund value takes some time to get or has zero realisable value. On taxation of redress, the FCA has no remit in setting taxation arrangements which are a matter for the Government.
5.22 Lastly, we set out the steps firms should follow to issue redress determinations and
pay redress to consumers in stage 3 of the scheme. We asked:
Q65: Do you agree with our proposals for issuing redress determinations to consumers? If not, what alternative approach would you propose? Q66: Do you agree with our proposals for paying redress to consumers? If not, what alternative approach would you propose? Q67: Do you have any other comments on the stages of the process that firms must follow to calculate redress under the proposed British Steel redress scheme?
5.23 Most of the respondents agreed with the steps firms must take to give consumers
their redress determination as set out in stage 3.
5.24 Regarding timelines, a few considered that 28 days is too short to pay redress to
consumers, but they qualified this by suggesting this does not provide enough time to gather the information required for the calculation. This indicates they may have misunderstood; 28 days is the time in which firms must pay the consumer from the

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme day the offer is accepted. Another considered 28 days may not be sufficient to carry out identification and anti‑fraud checks and obtain bank detail from consumers. One respondent thought 3 months is too long to calculate redress and 1 month should be sufficient. One respondent thought consumers should be given more opportunities to seek outside advice.
5.25 Respondents also commented on the approach to step 3. A couple of respondents
objected to redress covering initial advice charges where consumers accepted redress as a lump sum, or the additional compensation amount that we referred to as interest in CP22/15. Another questioned whether the Financial Ombudsman Service should determine cases where the referral involves the redress amount, or where the consumer has failed to respond to any information request. One firm suggested that firms may manage away their liabilities through selective timing of valuations and artificial advisory charges.
5.26 One respondent thought that providing a summary explanation of the calculation
backed up by details on request would be a more effective way of communicating with consumers. Another respondent thought it was important that consumers are able to check the economic assumptions used for the calculation. Our response We have considered the scheme steps in Chapter 4 of this paper, including stage 3 setting how firms should issue redress offers. The timelines allocate 3 to 5 months for firms to calculate redress. This is because we have considered the time it would take firms to collect information from consumers or on consumer’s behalf, and extended this timeframe where firms have to calculate an augmentation offer or consider claims for other losses outside of the calculation methodology. Outside of specific circumstances described in chapter 6 of PS22/13, the timelines also allocate 3 months for consumers to consider the offer and seek relevant outside advice if they require. Firms can start their identity and anti‑fraud checks from the day they send out the redress offer, providing them with more than the 28 days allocated to make the payment to consumers to complete their checks. In Chapter 5 of PS22/13 we discuss the importance of ongoing advice, and the appropriateness for redress calculations to allow for the cost of taking initial advice from a new adviser, in specified circumstances. Firms are required to issue a number of redress determinations following the completion of various scheme steps which may be the subject of a complaint to the Financial Ombudsman Service. These include:

the consumer is not in scope of the scheme
the consumer has opted out of the scheme
there is insufficient information to assess suitability or to calculate
redress
the advice was suitable
the unsuitable advice did not cause the loss
the redress offer

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme It is important that consumers have Financial Ombudsman Service referral rights following determinations of this kind. Firms’ explanation of the calculation in redress offers and the BSPS calculator will assist the Financial Ombudsman Service’s review of redress calculations. Consumers have different reasons for not responding to information requests, such as the complexity or unavailability of the information asked for, so we do not believe such consumers should have their access to the Financial Ombudsman Service denied. We note the concern that firms might attempt to manage away liabilities. Our general calculation methodology deals with the timing of valuation and calculation dates (Chapter 2 of PS22/13) so that redress calculations always use the latest quarterly economic assumptions. Firms will no longer be able to manipulate adviser charges as all calculations will use the same default level of charges (currently set at 0.5%) rather than the charges the consumer is currently paying. For the additional compensation amount we referred to as interest in CP22/15, we discuss this in detail in PS22/13. On the calculation explanations, we set out our requirements in Chapter 6 of PS22/13. In the BSPS template letters, we require firms to send out their redress determination letters with a summary calculation report including the key information consumers should check. We also require firms to provide a detailed calculation report with all the information used to calculate the redress amount on request and when the firm issues the redress payment confirmation. Consumers will be able to check their calculation report to understand the information firms have used to calculate their redress and challenge the appropriateness of any input. We will be responsible for updating the economic assumptions used by the BSPS calculator on a quarterly basis, and the rate for the key underlying economic assumptions used will be shown in the detailed calculation report. BSPS redress calculator
5.27 In CP22/15 we announced that we were developing a BSPS redress calculator to help
make calculations more consistent under the scheme, ensure more BSPS consumers receive fair and quicker redress, and reduce the overall costs of calculations. We asked:
Q68: Do you agree that the calculator should significantly reduce or eliminate the need for actuarial input? If not, why not? Q69: Do you agree that the use of the calculator should be limited to firms, the Financial Services Compensation Scheme and the Financial Ombudsman?

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Q70: Do you agree that the use of the calculator should be mandatory? If not, why not? Q71: Is your firm interested in taking part in testing the redress calculator for the proposed British Steel redress scheme? Q72: Do you have any other proposals on how to make redress calculations for the proposed British Steel redress scheme more consistent? Q72: Do you have any other comments on the development of the calculator?
5.28 Most respondents agreed that the calculator should significantly reduce or eliminate
the need for actuarial input. Some thought we should make a redress calculator available for all DB redress. However, some respondents said that the accuracy of the calculation result relies on the quality of the data supplied and how this is inputted into the calculator, and only an actuary can check the reasonableness of calculation results.
5.29 Most respondents agreed that access to the calculator should be limited. A number
of respondents thought the calculator should also be accessible to third party firms representing the firm to calculate redress. A couple of respondents thought access to the calculator by CMCs and consumers should help reduce complaints on amounts offered, particularly where the calculation determines that no redress is owed. Others thought that giving access to the calculator to users who do not have the knowledge or expertise to accurately enter the required data would increase complaints.
5.30 Most respondents agreed that the use of the calculator should be mandatory, but
some thought other calculation tools should be allowed as it should produce the same result. One respondent thought this would concentrate the risk of BSPS consumers getting the wrong redress if the BSPS calculator is found to be inadequate. Another respondent was concerned that offering a free calculator is commercially harmful to firms who have been providing actuarial support, and that we are underestimating the level of experience and investment involved in producing and maintaining such a tool.
5.31 A few respondents put forward some suggestions to make BSPS calculations more
consistent such as using BSPS specific assumptions, a guaranteed income method of redress, or selecting the higher paying scheme as the comparator scheme. We discuss all of these above.
5.32 Lastly, some respondents commented on the development of the calculator
and thought it should be thoroughly tested for actuarial accuracy, contain clear instructions and be designed with users in mind (referring to the Government Service Standard for user centred digital products). Our response We are building the calculator as an excel spreadsheet and it is on
schedule to be delivered in April to coincide with the updated quarterly
assumptions. We have engaged the Government Actuary’s Department (GAD) to conduct an independent review of the methodology underpinning the calculator, and the accurate reflection of the various

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme BSPS scheme benefits. The spreadsheet format of the calculator will enable firms to report the calculator inputs and outputs to us, similar to the way they will be able to report on their completed DBAATs. We are expecting that most redress will now be offered as a lump sum because firms are no longer required to offer redress by augmentation for every case (as discussed above) unless the consumer requests it. We have decided that any tax implications for augmented offers should be calculated by firms outside the calculator. This is because firms are best placed to make subjective determinations for annual and lifetime allowance capacity based on the consumer’s upcoming changes in circumstances. Similarly, when paying cash lump sums where a notional tax deduction is applied, firms are best placed to assess the rate of tax a consumer expects to pay in retirement, based on their personal circumstances. Firms will be required to enter into the calculator their determination of the lump sum amount payable to the consumer after the notional tax adjustment they have applied. The objective of providing fair and consistent redress to BSPS consumers relies on the quality of the BSPS calculator. For this reason, the calculator build and development includes a thorough testing plan to challenge the calculators’ actuarial reliability, technological robustness, and user accessibility. We have noted the respondents who volunteered to take part in the calculator testing, and this user testing phase will take place in due course. While other actuary‑approved methods may provide similar calculation results to the BSPS calculator, mandating the use of the BSPS calculator helps to ensure consistent outcomes for consumers. Another objective of the BSPS calculator is to reduce the overall cost of calculations and provide quicker redress to BSPS consumers by reducing the need to rely on external actuarial input. We noted respondents’ concerns about the lack of actuarial oversight for each calculation to sense check data inputs and improve the accuracy of results. In
Chapter 3 of PS22/13 we discuss how actuarial oversight is not required
for each calculation; firms can instead rely on an actuary‑approved approach to calculate redress and we added guidance on when firms should consider using an actuary for certain aspects of the calculation (see DISP ANNEX 4.2.7). As noted above we have engaged GAD to independently review the BSPS calculator. To improve the accuracy of data inputs, we will produce clear and accessible instructions for calculator users. Firms will be required to provide consumers with sufficient information so they can challenge their results. Consumers can refer the matter to the Financial Ombudsman Service if they have any concerns about the calculation that the firm has carried out. While actuarial oversight is not required for each calculation, firms are free to engage actuarial support, as long as firms bear any associated costs, and the actuarial firm uses the BSPS calculator to determine redress. Third party firms representing firms for redress calculations will have access to the BSPS calculator. We are also giving firms the option to use the BSPS calculator to calculate redress for BSPS consumers outside the s.404 scheme while this calculator is available. The calculator

PS22/14
Chapter 5
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme should not be used for non‑BSPS transfer calculations. Regarding wider access to the calculator, we believe that the enhanced disclosure requirements are a better way for consumers or their CMCs to check redress offers, because it is unlikely they would have the expertise to enter the data accurately into the calculator. The calculator will require updating to reflect changes to underlying assumptions and will be unavailable at certain times while these changes are made. We will notify firms about the calculator’s availability, and our Supervision function will follow up on firms using expired versions of the calculator.

PS22/14
Chapter 6
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme 6 Cost benefit analysis
6.1 In this chapter we consider the feedback to our assessment of the costs and benefits
of our proposed opt‑out s.404 redress scheme.
6.2 We asked the following question in CP22/6:
Q20: Do you agree with our estimates of the costs and benefits of our proposed scheme?
6.3 Two thirds of respondents disagreed with our estimates of the costs and benefits.
However, a number of respondents noted that we gathered our data from multiple sources and analysed this in depth. These respondents also stated that the estimates and assumptions appeared reasonable, and so the rationale for a s.404 opt‑out scheme seemed sound. Some agreed with our estimates of the benefits to consumers.
6.4 Others believed the CBA process is fundamentally subjective and inherently unreliable.
A few suggested that the costs will not be reliably known until the proposals for the scheme are finalised (through changes to the pension transfer redress methodology that we proposed in CP22/15 and implemented through PS22/13) and extent of harm becomes known, as results emerge from firms’ reviews under the scheme.
6.5 Some respondents asked for more information about the underlying data for example:

how we reached our £60,000 average loss estimate figure (being ~16% of the
average pension transfer value)
why we believe 60% of cases that end up at the Financial Ombudsman Service
under the scheme will be upheld and sent back for redress calculations
that the payment of redress should be taken into account as a cost for firms under
the scheme.
how our modelling has accounted for variations in the levels of redress when
comparing 2018 transfers with pre‑2018 transfers.
6.6 Industry respondents commonly believed we had underestimated the cost
implications for advice firms, FSCS and others in 3 main areas:
compliance costs
redress costs
knock‑on costs outside of BSPS

PS22/14
Chapter 6
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Compliance costs
6.7 The first major theme and argument in responses was that compliance costs to firms
will be higher than forecast:

Several respondents thought that our estimate of £1,000 for firms to assess
cases was too low given the complexity of the cases and the need for third‑party involvement. However, very few provided any alternative figures to back this up.
Some respondents also thought our estimate for carrying out redress calculations
was too low and that the actuarial cost was likely to be £1,500 or higher. A few of these respondents quoted actuary prices that they had seen for 2022, which showed for example that the most basic loss calculation could cost £1,175+VAT, increasing to £2,150+VAT for an investor retiring before scheme retirement age, plus additional charges of up to £700 for assessing State Earnings Related Pension Scheme impact and £225 per hour for assessing lifetime allowance impacts.
Some suggested we underestimated or did not fully consider other associated
costs, such as the legal costs needed to defend and address complaints, the management costs to respond to FCA surveys and publications, reputational damage through carrying out the scheme steps and other factors leading to a loss of sales and clients.
Regarding Financial Ombudsman Service case costs (estimated at £500 per case),
a significant number believed that £1,000 or more is a more accurate estimate, especially where a case goes to an Ombudsman for a decision. These respondents typically argued that cases can be lengthy and time consuming, with a possible minimum 4 hours of firm time spent per case.
Also related to the Financial Ombudsman Service, a sizeable number of
respondents asked whether we accounted for the 1 April 2022 reduction in the complaint payment allowance/threshold from 25 to 3 cases before a firm must pay a fee (£750) for each referral. They argued that costs for smaller firms arising from this change will be particularly significant, especially in the context of the facilitated referral process for cases marked as ‘suitable’ by firms. To reduce the burden on small firms, one suggested that we should waive Financial Ombudsman Service fee costs for small firms under the scheme. Redress costs
6.8 Respondents also commonly claimed that the redress costs are underestimated,
as well as knock‑on consequences for firm insolvency, burdens on FSCS and other parties, while linking back to our statutory objectives of ensuring market stability and competition. Feedback focused on the following calculations and outputs:
Average redress figures of £60,000 and £82,000 in CP22/6 were based on FCA
firm data and FSCS data respectively, representing 16% and 22% of an average £374,000 pension transfer value. A few suggested these estimates were too low, arguing that for some firms the average may range from 50‑75% of the CETV. Others said any averages mask the fact that redress costs often vary widely, ranging from no loss cases to hundreds of thousands payable in redress.
On the estimated 6‑15% of cases resulting in no loss, a few suggested there
was more uncertainty in what proportion will end up as loss cases, pointing to fluctuating market conditions in 2022 which have affected gilt yield rates.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme

Some felt that the estimate that 1,400 members will seek and receive redress was
too low.
A common focus was on our estimated 46% unsuitability figure. Industry
respondents often suggested the scheme would bring out a lower figure in practice.
Firms and representative trade bodies also queried the difference between the
46% unsuitability rate in FCA file reviews and 98% uphold rate at the Financial Ombudsman Service.
Another prominent area of concern among industry responses was the
non‑targeted and opt‑out nature of the scheme, with some believing this poses an increased risk for BSPS firms. Respondents argued that firms’ ability to meet redress costs is overestimated and that there would be a higher firm failure and market exit rate, particularly among smaller firms. A few responses claimed there could be possibly up to 40% failure. A few suggested that FSCS may need to meet most of the redress under the scheme (our CBA estimated this at near 30%), and that due to FSCS’s compensation limits, this would in turn limit the average redress paid out to consumers. Knock‑on effects beyond BSPS
6.9 Some went on to suggest that the risks to BSPS firms could have knock‑on effects for
the wider advice market and other financial advice markets too, with potentially higher FCA and FSCS levy increases as well as increases to PII premiums in future. On FSCS levy costs, some attempted to estimate the final impact at £350m‑400m or more, without providing further information to underly this. We discuss in more detail the PII‑related feedback we received in paragraph 6.11 below.
6.10 Respondents who focused on knock‑on impacts referred to a range of potential
circumstances that might affect consumers and the market, such as orphaned clients, risks to clients in vulnerable circumstances (including fraud), loss of jobs and the impact on local economies, reduced consumer choice and advice availability, higher fees and therefore worse consumer outcomes overall. Our analysis of the PII market for BSPS
6.11 The final theme frequently arising from feedback was our assessment of the PII market
and how it might cover redress. Responses claimed that:
We may have overestimated PII providers’ willingness to cover redress, with fewer
claims covered and a larger proportion of redress falling on firms (and FSCS where firms fail).
No PII cover would be available upon scheme implementation for a large proportion
of firms under our proposed approach, as an opt‑out process would not satisfy notification requirements for a valid claim under PII policies (with many written on a claims‑made basis). This was the worst‑case scenario modelled in CP22/6.
If any BSPS policies do remain, they would feature much higher premiums and
excesses, regardless of a firm’s reputation or track record in its quality of advice. One response suggested average excess was now likely to be around £50,000, rather than £25,000 per claim as we estimated in CP22/6.

PS22/14
Chapter 6
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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme

Some respondents queried why our PII redress figures differed by only £2.3m under
an opt‑out s.404 (£19.4m) compared to an opt‑in s.404 approach (£17.1m). Several suggested that we should revisit these figures and impacts on firms and FSCS in terms of broader cost burdens and expected firm failure, including where PII is widely unavailable. Our response While we have sought to estimate and consider all costs arising from the scheme based on the best evidence available, like all projections our estimates are subject to uncertainty. Feedback based on the detail of the figures and assumptions presented in our CBA in CP22/6 does not materially impact our overall assessment that a s.404 redress scheme is desirable compared to other options. We note that s.404(1)(c) FSMA gives the FCA discretion to make an overall determination of desirability. We do not think it would be appropriate to waive certain costs that firms might face as a result of the scheme, for example the Financial Ombudsman Service case fee. If we did this, these costs would need to be absorbed by other parties such as the Financial Ombudsman Service or other authorised firms. Although a few respondents provided alternative figures for the likely costs to assess cases and calculate redress, we have continued to use a £1,000 estimate for each of these costs. We explain why in our updated CBA in Annex 1. For instance, we believe that our planned redress calculator will significantly reduce the cost burden on firms to carry out redress calculations. Our file review figure is based on the latest, up‑to‑date evidence of the costs charged by consultants to review cases. We do not consider that the changes we are making in PS22/13 to the redress methodology will have a material impact on how much redress we estimate the scheme we deliver. This is because the changes largely relate to the administration of redress payments. It is likely that the main changes to our proposals in this area (regarding augmentation of redress payments and the frequency of updating the economic assumptions) will reduce the administrative cost to firms of carrying our redress calculations. We will also be providing a calculator for firms to use for scheme cases. We have made several revisions to our estimates in response to feedback and to ensure that our estimates are up to date:
We have included more recent data from the Financial Ombudsman
Service, FSCS and Supervision data collection.
Around 400 consumers have complained to the Financial
Ombudsman Service over the last 6 months and so will be out of scope of the redress scheme. This has reduced the starting number of transfers in scope of the scheme.
The results of our file reviews were that 46% of cases were
unsuitable and in approximately 14% of cases the suitability of the recommendation was unclear due to a material information gap

PS22/14
Chapter 6
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme (MIG). For example, a case might be classified as a MIG case where there is insufficient information about the consumer or the scheme benefits to assess suitability. Our cost and benefit estimates are based on the assumption that around half of cases with material information gaps will be rated as unsuitable rather than suitable. We have designed the DBAAT rules in such a way as to assume the majority of MIGs are unsuitable. The presence of a MIG is likely to indicate that the firm has not taken reasonable steps to ensure suitability and has failed to collect or consider critical information. As the scheme’s design makes it easier for the consumer to complain to the Financial Ombudsman Service, we have updated our assumption for the expected proportion of consumers who will refer their case to the Financial Ombudsman Service after the firm assesses their case as suitable from 10% to 20% of in‑scope decisions. Therefore, the model uses an overall unsuitability rate of approximately 53%.

PII cover has been excluded from the central scenario following
discussions with a specialist insurance Counsel and a review of policy terms and conditions. This work suggests that following annual renewal of policies, there is likely to be little or no PII cover available if a redress scheme is implemented (because policies will include specific exclusions for these cases). We are considering how we can assist firms if insurers wrongly refuse to accept notifications of a claim prior to renewal.
We have carried out further analysis of available data and increased
the estimated percentage of no loss cases from 6% to 32% based on updated claims data from the FSCS. Since the start of 2022, long term gilt rates have increased substantially (eg from 1.5% to 3.9% at a 15‑year term; from 0.5% to 2.2% at 30 years). This will have resulted in a material fall in the value we place on the cost of replicating the consumer’s transferred DB pension (and hence the redress, increasing the percentage of no loss cases).
Extrapolating from the latest FSCS claims data (covering Q3 2022),
in which average financial loss reduced from 22% to 16.5% of the pension transfer value, we have also reduced the estimated average redress from 16% of the transfer value to 12% (from approximately £60,000 to £45,000), to reflect changes to the economic environment. The redress calculation methodology is designed to respond to changes in the economy by using assumptions based on financial markets’ future expectations of economic factors. These assumptions are used to estimate the value of the DB benefits. In particular, the calculations are heavily influenced by long term gilt yields and long‑term inflation expectations.
At the same time the value of the DC benefits depends on the
performance of asset markets – in particular equities, gilts and corporate bonds which commonly make up the consumer’s DC pot. These values have not changed to the same extent as gilt yields and therefore do not offset the impact of gilt yield movement.
We previously estimated in our central scenario that approximately
40 (10% of firms in scope) firms would fail as a result of the scheme. In our updated central scenario, we still estimate that 40 firms will fail as a result of the scheme. No change in the number of firms that are likely to fail is a result of counterbalancing factors. We expect many affected firms to lose PII cover and to change their capital positions.

PS22/14
Chapter 6
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme On their own, we would expect these factors to increase the number of firms that will fail as a result of the scheme. However, the lower number of consumers in scope of the scheme reduces the overall redress paid. Similarly, the proposed asset retention rules should help to ameliorate some of the risk of asset dilution. In CP22/6 we estimated that FSCS would be responsible for £20.6m of the redress paid in our central scenario. We now estimate that the redress paid by the FSCS will be £15.4m.

PS22/14
Annex 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Annex 1
Revised cost benefit analysis
Summary

This Annex sets out our update to the assessment of the costs and benefits of the
s.404 redress scheme for unsuitable pension transfer advice for BSPS members, which we proposed in CP22/6. Our cost benefit analysis has informed our view on the desirability of proceeding with the scheme.
Our estimates in this Policy Statement are based on the same economic modelling
approach taken in CP22/6. We have used updated data and assumptions where we have new information. The main differences in this CBA are that:

We use new data from the FSCS on average redress amounts.
We draw on new evidence affecting the fraction of cases in which consumers
experienced no financial loss after receiving unsuitable pension transfer advice.
We amend our assumption for the proportion of consumers who are told they
received suitable advice, but who will refer their case to the Financial Ombudsman Service.
We remove the assumption that PI insurers will contribute towards redress
liabilities, based on updated information.

The main benefit of our proposals is the payment of redress to BSPS members who
received unsuitable advice. We estimate the total redress paid to consumers under our s.404 scheme to be £49m under our central scenario. (NB. We round numbers in our presentation of estimates throughout this CBA.) Since some redress would be paid under the current supervisory and enforcement approach to BSPS, we estimate the incremental amount of redress relative to the counterfactual to be £36.1m. Redress represents a transfer to BSPS members who received unsuitable pension transfer advice from the firms that provided that advice, to the extent that they remain in business.
As in CP22/6, we have conducted sensitivity analysis of some of the key assumptions in
our modelling. Our sensitivity analysis assesses the impact of varying key assumptions on our estimates of the costs and benefits of the s.404 redress scheme. We have carefully examined the impact of changing these assumptions, including the impact on the amount of redress that would be paid to consumers. Compared to the alternative options we have identified, we consider that a s.404 scheme secures the highest level of redress for consumers, relative to the costs of the scheme
Our s.404 scheme could lead to other wider benefits from improved market
confidence, particularly in the advice market. Although these effects are not practicably quantifiable and we do not consider them significant factors that influence the choice of option, if realised, they would make the case for implementing our s.404 redress scheme stronger.

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Annex 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
6. The redress costs of the scheme will be paid by advice firms. Redress will only be
directly payable by firms if consumers suffered financial loss following the firm’s unsuitable advice.
7. Some advice firms may not be able to meet their liabilities under the scheme and may
leave the market. In cases where advice firms become insolvent, outstanding liabilities will be passed to the FSCS, representing a cost to wider industry. We estimate a cost of £15.4m to the FSCS, or £10.2m relative to the counterfactual.
8. In addition to redress payments that firms will need to pay to BSPS members found
to have been given unsuitable advice, we estimate that advice firms will incur around £8.3m in compliance costs to review their historical BSPS transfers, and to deal with possible complaints and challenges regarding their assessment. Those firms that have given unsuitable advice will incur an estimated additional £1.7m to calculate and administer the redress due, including the costs relating to claims upheld by the Financial Ombudsman Service.
9. Our proposal will lead to administrative costs for the FCA, the Financial Ombudsman
Service, and FSCS. We estimate the FCA will incur costs of around £3.2m, FSCS will incur administrative costs of £0.5m, which will be recovered from firms via the FSCS levy, and the Financial Ombudsman Service will incur costs of £0.4m that will be raised through Financial Ombudsman Service case fees paid by firms. The Financial Ombudsman Service’s costs are based on a scenario in which advice firms correctly self‑assess the suitability of the pension transfer advice on their books. If this were not the case, and firms incorrectly assess a greater share of claims as suitable, more cases might be referred to the Financial Ombudsman Service and therefore its costs will be higher.
10. We have amended our assumptions regarding PII following discussions with specialist
insurance counsel, a review of policy terms and conditions, and our latest supervisory activity and market intelligence. This work suggests that following annual renewal of policies, there is likely to be little or no PII cover available to firms for BSPS transfer‑related redress pay‑outs if a redress scheme is implemented. For this reason, we assume in this CBA that firms in scope of the scheme will have no PII cover available to cover any redress liabilities. This differs from our central assumption in CP22/6, although we acknowledged at the time within our sensitivity analysis the prospect of insurers withdrawing from the market.
11. During the consultation period, we have considered the potential wider market
implications of our s.404 redress scheme relative to the counterfactual. As in our CBA in CP22/6, we conclude that it is unlikely that our proposal would lead to wider deterioration in the PII market beyond BSPS firms, since the necessary sequence of events to bring about contagion following a redress scheme is highly indirect. Furthermore, we believe the risk that competition in the market for DB transfer advice will be materially affected by our proposal is very low. Our analysis indicates that even in a scenario where future DB PII premiums rise further, the effect on prices for and the market for DB transfer advice would be mitigated under plausible scenarios. Our estimates also indicate that BSPS firms that may leave the market following our proposal would represent a small reduction in the supply of financial advice, both for DB transfers and other services those advisers provide.

PS22/14
Annex 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Problem and rationale for intervention
12. In CP22/6 we presented our analysis of drivers of harm and rationale for intervention.
They remain unchanged. A large proportion of BSPS members received unsuitable advice recommending they transfer out of their DB pension. Because the advice was inconsistent with their preferences or circumstances, it placed BSPS members at risk of financial harm, potentially causing them to lose a guaranteed stream of income. The rationale for a s.404 redress scheme, as well as the alternatives under consideration, is for members who suffered financial harm to receive appropriate redress.
13. We present our estimates of this harm on a per‑consumer basis later in this CBA.
Overall, under our central scenario we estimate around 1,900 consumers in scope of this proposal experienced an average financial loss of around £41,000, implying a total harm of around £77m. Our proposal
14. Chapters 3‑5 of this PS set out our intervention. In summary, we are using our s.404
power to require firms to establish and carry out a consumer redress scheme for BSPS members, and the position is largely unchanged as from CP22/6. Firms will be required to identify all consumers in scope of the scheme, review the advice given to those consumers (who haven’t opted‑out of the redress scheme), and where the advice is found to be unsuitable, calculate and pay any redress owed to the consumer. The scheme will cover consumers who received advice between 26 May 2016 to 29 March 2018 to transfer out of BSPS. Counterfactual and alternative options
15. Our CBA estimates are expressed relative to a counterfactual that would arise if we did
not implement a s.404 redress scheme.
16. We consider the same counterfactual as in CP22/6, which is our current supervisory
and enforcement approach to BSPS (see Chapter 2 of this PS). Our PBR and enforcement work has targeted higher‑risk DB transfer advice firms and has reached around 2,500 BSPS members. The counterfactual is that the currently planned reviews are completed but not extended, covering around 1,000 further transfers. It should be emphasised that the counterfactual is materially different from a ‘do nothing’ scenario; if we continued our supervisory approach, some consumers would receive redress from their advisers.
17. We consider the same alternative options as in CP22/6. In summary they are:

An extension of the current supervisory approach.
An enhanced communication strategy to encourage eligible BSPS members to
complain.
A s.404 redress scheme covering all firms that arranged BSPS transfers but with a
requirement that consumers opt‑in to the scheme.

PS22/14
Annex 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Estimation approach
18. Our cost and benefit estimates are derived from our modelling of the outcomes of
the file reviews we carried out to establish if we met the legal tests for a s.404 redress scheme. The model is calibrated using updated evidence and, where there is more uncertainty, assumptions that reflect a range of possible scenarios. Overview of our model
19. Our model for the opt‑out s.404 scheme follows closely the model presented in
CP22/6 and can be summarised as follows:

The model starts with the estimated number of transfers in scope of the scheme.
Firms in scope will incur a cost to review the suitability of each transfer.
We apply the estimated market average unsuitability rate to derive the number of
transfers found to be suitable and unsuitable for each individual firm. For transfers assessed as unsuitable, firms will calculate the redress owed to the consumer, and if necessary, contact the consumer for more information.
For transfers assessed as suitable, consumers will have the right to complain to
the Financial Ombudsman Service. We will require firms in the scheme to pass consumer details to us so we can take steps to facilitate referrals to the Financial Ombudsman Service for some or all of the cases that are assessed as suitable. Based on our analysis of Financial Ombudsman Service data and our estimated consumer response rates, we assume that a certain proportion of consumers will complain, and that the Financial Ombudsman Service will uphold a proportion of these complaints.
We estimate the average redress amount using firm survey data on BSPS DB
transfers and data from the FSCS. We take into account data for the fraction of consumers who received unsuitable advice but experienced no financial loss.
We apply the same assumptions as in CP22/6 about response rates of consumers
who: opt out of the scheme, provide additional information where required, and accept the compensation offered to them.
We then, for each firm individually, calculate the estimated redress bill using each
firm’s volume of BSPS transfers which qualify for redress. We compare that redress bill with the firm’s financial position. This allows us to identify if a firm can pay their redress bill, or whether the liability is likely to lead to them becoming insolvent.
Contrary to our assumption in CP22/6, and based on new information set out
below, we assume that affected firms will not have access to PII when paying their redress bill.
We assume residual redress liabilities among firms that become insolvent will be
passed to FSCS. FSCS will award compensation up to the relevant limit (£85,000). Compensation costs will be reflected in FSCS levies, which are a cost to wider industry.

Our model estimates the costs and benefits of the alternative options in a very similar
way. The most important differences between the options are the number of transfers in scope and the estimated rates of consumer action. Our model does not include any allowance for wider effects of our proposal on the advice market, but we consider those separately in the CBA.

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Annex 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Data
21. We use data from a range of sources, and updated since CP22/6, covering transfers
from May 2016 to March 2018 in our modelling of the costs and benefits:

Building on the FCA firm survey in January‑February 2022, we have further
engaged with firms; including new and revised submissions from 20 firms. In total, we have drawn on information from around 400 firms. The survey collected information on whether the firm had advised BSPS members, the volumes of consumers advised or not advised to transfer, total transfer values, complaints and redress paid to date.
The Financial Ombudsman Service. We use updated complaints data from
the Financial Ombudsman Service regarding BSPS DB transfers. The data is categorised by outcome status – ie whether the complaint is open or closed, and if closed how it was resolved.
Our previous supervisory and enforcement work, including PBRs of advice given to
BSPS members.
FCA regulatory returns. We use updated regulatory returns RMA‑D on regulatory
capital and financial resources.
Data on FSCS cases, which inform our estimates for the financial loss experienced
by consumers.

To inform our understanding of the wider implications of our proposal, we undertook
further work during the consultation period on the PII and DB pension advice markets. Assumptions
The sub‑sections below set out the key features of our model and some of the key
assumptions that underpin our cost and benefit estimates. We have conducted a number of sensitivity analyses on key assumptions in our analysis. These are presented in paragraph 55 below. Number of qualifying transfers
In total we estimate that around 8,100 BSPS DB pension transfers were arranged over
the period May 2016 to March 2018. The reasoning behind this time period is explained at paragraphs 3.2‑3.4 (‘The relevant period’) of this Policy Statement. The number of transfers is higher than was reported in CP22/6 to reflect a longer relevant time period which this scheme covers.
To derive the number of transfers in‑scope of the redress scheme, we adjust this
figure as outlined in Table 1. We estimate that around 3,600 BSPS transfers, arranged
by approximately 350 firms, are within scope of the scheme.

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Annex 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Table 1: Estimated number of cases within scope of our proposals
Population
Estimated
Numbers Comments
Number of arranged transfers 8,100
Number of advised transfers 7,700 Here we remove a non‑advised rate of 5% based on supervisory information. Of which were clients of firms who are insolvent or no longer exist 2,100 FSCS will assess breach, causation and loss in accordance with the rules of the redress scheme. Of which clients of firms that has or is being reviewed as part of our supervisory PBRs 300 This group of clients is not included in the scheme Of which clients of firms that are otherwise out‑of‑scope 1,000 For example, we exclude claims where the consumers of out‑of‑scope firms have complained about the suitability of their transfer to the Financial Ombudsman Service and the case has not been passed to FSCS. The number of arranged transfers by firms that are in scope of s. 404 4,300 This the total number of cases left after removing firms that are out of scope Of which consumers have complained about the suitability of their transfer to the Financial Ombudsman Service 600 The proposal is to exclude these consumers from the scheme. The reported figure comprises those reported in CP22/6 and additional complaints received until the end of August 2022. Of which ‘insistent’ (clients that were advised to remain in the scheme by their adviser but asked their adviser to arrange a transfer) 100 The proposal is to exclude these consumers from the scheme. The total number of transfers in scope of s. 404 3,600 Note: Numbers are rounded to the nearest 100.
26. For the alternative option of an opt‑in s.404 redress scheme, the number of transfers
in scope is the same as for our opt‑out s.404 scheme, around 3,600. The number of consumers that actually receive redress under each option will differ according to the response rates. This is set out in the sections below. Transfer value
27. As in CP22/6, we estimate the average transfer value for BSPS transfers is £374,000
based on information from our survey of advice firms.
File review
28. The s.404 redress scheme requires each firm to review all in‑scope cases where they
advised a BSPS member to transfer out of their DB scheme, and where the client transferred. Any consumer that opted out of the s.404 redress scheme would be excluded at this stage.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
29. As in CP22/6, we assume each file review will cost £1,000. This figure is based on our
evidence to date of costs charged by consultants to review the contents of each case, analyse them as necessary, and record information in the appropriate manner. As we set out in our response to the feedback in Chapter 6, we believe this assumption remains valid, even though some respondents suggested it should be higher. Unsuitability rate
30. As in CP22/6, we draw on evidence from file reviews that 46% of advice to transfer
given to BSPS members was unsuitable based on evidence in firms’ file records. We base this on updated statistical analysis by an external statistician following additional file reviews since CP22/6. The 95% confidence interval for the unsuitability rate has been estimated to be 39% to 52%. (The mean unsuitability rate is the same as CP22/6, but the confidence interval has narrowed relative to the previous range of 37% to 54%.) In a further 14% of files reviewed, it was unclear if advice was suitable, for instance due to missing information. We assume firms will resolve these cases by either contacting the consumer or a third party. Consumers can refer complaints to the Financial Ombudsman Service if they are concerned that the firms has not complied with the scheme rules.
31. We do not have information to estimate the share of unsuitable advice among the
cases with material information gaps. Therefore, as in CP22/6, we assume that among those cases half of consumers received unsuitable advice.
32. Based on this evidence, our central estimate for the unsuitability rate of assessed
BSPS transfers remains 46%. After taking into account the evidence concerning unsuitable advice among cases with missing information, the overall unsuitability rate is estimated to be around 53%. As part of our sensitivity analysis, we also vary the central estimate of the unsuitability rate between 39% and 52%, covering the estimated 95% confidence interval. Calculating redress
33. Firms will also incur the costs of calculating redress for cases where advice was found
to be unsuitable. As in CP22/6, we estimate that the cost of each redress calculation is £1,000. This is additional to the cost of file review.
34. As we outlined in our response to the feedback in Chapter 6 of this Policy Statement,
we believe this assumption remains valid, even though some respondents suggested that it should be higher.
35. We also believe this figure will likely overestimate the costs of calculating redress because
we are developing a redress calculator to be launched alongside the s.404 redress scheme with the aim of reducing the burden on firms and ensuring consistent outcomes. As a result, we anticipate that firms will not need to use specialist actuarial firms to undertake calculations. This could materially reduce the assumed cost of calculations. Redress amount
36. In CP22/6, we estimated average financial losses incurred by consumers as a result
of unsuitable advice to be about £60,000, representing around 16% of the average transfer value of £374,000. This figure was based on a sample of 132 cases where either the firm themselves or the Financial Ombudsman Service found the advice

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37. We have considered whether it is possible to update the CBA to take account of the
impact of any changes to the redress methodology. We have concluded that it would not be possible for us to do this. This is because we would need a representative sample of consumers who would be subject to the redress scheme, including information necessary to carry out redress calculations under the previous and revised methodology. For example, the consumer’s age, term to retirement, whether they are married or in a civil partnership and the charges they are currently paying. While we know how many transfers each firm subject to the scheme has carried out, we do not have this level of detail about the individuals who were advised. In the absence of this information, we consider it reasonable to assume that, as with redress calculations outside the scope of the scheme, the overall impact of the changes to the methodology on redress payments under the scheme will be modest. However we have conducted sensitivity analysis around the central scenario to account for a reasonable degree of uncertainty around redress payable under the scheme.
38. In the latest FSCS claims data covering the third quarter of 2022, we observed
a decrease in the average financial loss from 22% to approximately 16% of the pension transfer value, ie a relative decrease of almost 25% in the redress amount. Extrapolating this decrease to our current central scenario would reduce the estimated average redress from 16% to 12% (from approximately £60,000 to £45,000).
39. These changes reflect recent developments in the economic environment. The
redress calculation methodology estimates the value of DB benefits by using assumptions based on financial markets’ future expectations of economic factors. In particular, the calculations are influenced by changes in long term gilt yields and long‑term inflation expectations. As set out in CP22/6, we recognise that future redress figures may be affected by changing economic circumstances, but our model does not account for inflation explicitly or make assumptions around the timeframe of the pay‑outs.
40. We continue to use a financial loss figure of 16% as our central scenario in this updated
CBA, as in CP22/6. However, we recognise that the future direction of financial loss calculations is uncertain. To account for changes in recent data we now use a 12% financial loss figure as part of our sensitivity analysis, while we no longer use the 22%
figure within our sensitivity analysis. In addition, we have stress tested this parameter
further (to 9%) to reflect uncertainty over whether the current trend of interest rate rises continues, which would create further downward pressure on the valuation of DB pensions and therefore the estimated financial loss from unsuitable advice. Fraction of transfers where consumer experienced no loss
41. The share of redress cases where the FSCS assess that the consumer has suffered
no loss has risen markedly since we published CP22/6. The latest data available from FSCS show that 68% of BSPS members who received unsuitable DB transfer advice suffered financial losses. The remaining 32% received unsuitable advice but did not suffer financial loss as a result. Therefore, we have updated our assumption about the fraction of transfers where consumers experience no loss to 32% from 6% in CP22/6. Such an increase in ‘no loss’ cases is a consequence of changes in the economic environment that affect the calculation of redress, in particular a move away from

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme the low interest rate environment in the short and medium term. However, given the materiality of the change in this parameter, we continue to use an assumption of 6% of no‑loss transfers within our sensitivity analysis. Financial Ombudsman Service complaints
42. Consumers may complain to the Financial Ombudsman Service if their firm concludes
they received suitable advice. We have updated our assumption for the expected proportion of consumers who will refer their case to the Financial Ombudsman Service, based on further clarification of the details of the facilitated referral process. Although assessing the magnitude of these changes is difficult, we assume that 20% of in‑scope suitable decisions (consumers) will complain to the Financial Ombudsman Service, compared to 10% in CP22/6.
43. Our assumption for the uphold rate for these Financial Ombudsman Service
complaints remains unchanged (60%) from CP22/6 (see paragraph 48 of Annex 2).
44. Furthermore, as of the end of August 2022, around 400 additional consumers have
complained to the Financial Ombudsman Service since the launch of our consultation and so will be out of scope of the redress scheme. This has reduced the starting number of transfers in scope of the scheme. (These additional cases are captured in Table 1 with an increase (to 600) in the estimated number of consumers that have complained about the suitability of their transfer to the Financial Ombudsman Service. This explains the key differences between Table 1 and Table 2 in Annex 2 of CP22/6).
45. As in CP22/6, for every complaint that is referred to the Financial Ombudsman Service,
we assume advisers will incur a cost of £1,250, comprising of £750 case fee and £500 in compliance costs. Cases could be referred to the Financial Ombudsman Service when firms complete various scheme steps and issue redress determinations. In our cost estimation, we do not take into account the fact that each firm is not required to pay for its first 3 Financial Ombudsman Service cases per year because firms may have already exhausted their free case allowance for other business areas. Consumer response
46. We continue to use the assumption that 62% of consumers who received unsuitable
advice and are in scope to receive redress will respond to all communications. The consumer response rates used to inform this assumption were based on previous FCA experience, including response rates to previous DB pension redress exercises such as PBRs conducted by firms, as well as behavioural science literature. Our methodology for all of the options under consideration was set out in detail in Annex 3 in CP22/6. This assumption was not challenged during the consultation.
47. Our assumed consumer response rate makes a large difference to our cost and benefit
estimates (see paragraph 55). We note that the reduction in estimated average redress from approximately £60,000 to £45,000 could lead to a lower proportion of consumers than assumed in CP22/6 responding at the final stage of the redress process to accept their redress offer. Although we have amended the text of the letters that firms will be required to send to consumers, aimed at increasing the consumer response rate, the number of decisions that consumers need to make to get redress will largely stay the same as we assumed in CP22/6. We have therefore undertaken sensitivity analysis around the overall 62% response rate figure under a s.404 opt‑out scheme, ranging from 40% to 70%.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Claims on PII policies
48. In contrast to the central scenario in CP22/6, we assume that firms in scope of our
redress scheme will have no PII cover available to meet any redress liabilities. This follows discussions with a specialist insurance counsel, a review of policy terms and conditions, and our latest supervisory activity and market intelligence. This work suggests that following annual renewal of policies, there is likely to be little or no PII cover available to firms for BSPS transfer‑related redress pay‑outs if a redress scheme is implemented. We raised the potential of this scenario arising in CP22/6 and included it within our sensitivity analysis. Capital position and firm exit
49. We assume that firms for whom redress and compliance costs exceeds their capital
will become insolvent and exit the market. Market exit is estimated individually for every firm within our model based on the comparison of estimated liabilities with capital position.
50. As in CP22/6 we use 2 scenarios for firms’ capital position. Our central assumption
is the capital holding reported in the regulatory return RMA‑D, based on firm submissions up to August 2022. Since the capital position of firms could have changed since the latest regulatory return, we also model a lower bound capital holding that represents the minimum capital requirements defined in regulation (IPRU‑INV 13.1).
51. Regarding the ordering of liabilities, since our model operates on a stock rather than a
flow basis (see ‘limitations’ section below), we make some modelling simplifications. We factor in compliance costs of reviewing the files, calculating redress and dealing with Financial Ombudsman Service complaints to this calculation on a per firm basis. The firm is assumed to pay as much as possible of their redress liabilities from their capital reserves. If the costs and liabilities exceed their capital resources, the firm is declared insolvent and leaves the market. Otherwise it stays solvent and continues as a going concern. Our model assumes that firms can use all their capital to pay redress even if that means that their capital falls below the regulatory minimum. Hence, they would be forced to go out of business only if they have no capital left. Any residual liability goes to FSCS for redress. As noted above, in contrast to CP22/6, in calculating firm liabilities we no longer assume firms have PII coverage for any BSPS scheme liabilities. FSCS
52. For firms that default during the redress scheme, any outstanding scheme liabilities will
be passed to the FSCS. FSCS redress for pension transfer advice is capped at £85,000. Redress paid and fees incurred by FSCS will in turn be reflected in the FSCS levy and paid for by industry.
53. As in CP22/6, the FSCS administrative costs are estimated to be £1,450 for the
end‑to‑end processing of a DB transfer claim, including the redress calculation.
54. We assume that, where a firm becomes insolvent, only the residual BSPS liabilities of
the firm will be passed to FSCS, rather than all of its liabilities.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Sensitivity analysis
55. Our central assumptions are set out in Table 2.
Table 2: Summary of assumptions for the central scenario
Assumption Values
Consumers in scope of time period 8,100
(May 2016‑March 2018 period)
Consumers in scope of s.404 scheme 3,600
Unsuitability rate 46%
Financial loss (used to calculated average redress value) 16% % of no‑loss cases 32% Capital resources RMA‑D PII cover No cover Overall consumer response rate (opt‑out s.404) 62%
56. To account for the uncertainty in our assumptions in Table 2, we have undertaken
sensitivity analysis. We calculate what impact varying the key parameters in the model has on the estimated total value of redress paid. We consider changes to: the unsuitability rate (to 39% and 52%); the financial loss assumption (to 9% and 12%); the consumer response rate (to 40% and 70%); and the proportion of unsuitable cases that ultimately experience no loss (to 6%).
57. The results of the sensitivity analysis are shown in Figure 1, which reports the
difference from the central scenario in the amount of redress paid as a result of varying the parameters. To provide a sense of relative scale, we have sorted the results by their estimated magnitude compared to the central scenario.
58. Our analysis indicates that the sensitivities that have the biggest impact on our
estimates of redress paid are changes to the financial loss, reducing the consumer reach and the proportion of unsuitable cases that experience no financial loss. All of which change the redress amount relative to the central scenario by more than 20%. Varying our other assumptions has a more marginal effect on our estimates.

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Figure 1: Impact of our sensitivity analysis on the estimated aggregate redress paid
compared with the central assumptions Change in redress paid (%) -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% Share of no-loss cases (6%) Consumer Reach (70%) 52% Unsuitable 39% Unsuitable Financial Loss (12%) Consumer Reach (40%) Financial Loss (9%) Sensitivities Limitations of our approach
59. The main limitations of our model are set out in detail in CP22/6. To summarise, these
include:

We apply uniform average unsuitability rates and percentage redress values to all
firms in our model, rather than varying these by firm. As a result, we expect our model will miss some distributional effects, or differences in impact on individual firms.
The latest regulatory returns data available used in the CBA – updated in August
2022 – can be potentially up to a year out of date because of reporting cycles. The capital position of firms, in particular, may have subsequently changed.
Our model operates on a static stock basis, rather than considering the flow
of cases and liabilities each firm will face. Our approach may overestimate or underestimate the impact on the financial viability of firms and the impact on FSCS.
Our consumer response rate assumptions are subject to a wide degree of
uncertainty. Consumer response rates are highly context specific. The applicability of response rates from previous DB pension redress exercises to a s.404 scheme is uncertain. We also note that response rates may also vary according to the levels of compensation a consumer could receive.

As in CP22/6, overall, we believe that our approach to estimating costs and benefits
is proportionate given the information constraints and in spite of the limitations set out above.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Summary of costs and benefits
61. Table 3 summarises our estimates of the quantified costs of the s.404 redress
scheme. These figures are expressed relative to (ie over and above) our counterfactual, our current supervisory and enforcement approach to BSPS and therefore are different from the total amounts of, for example, redress consumers would receive. We set out our estimated impact under our s.404 opt‑out scheme, the counterfactual and the alternative options in absolute terms in Table 6.
Table 3: Summary of costs and benefits for the s.404 redress scheme relative to the
counterfactual
Category
One‑off or
Ongoing Benefits Costs
Consumers One‑off £36.1m –
Firms* One‑off – £8.4m
(excluding redress payments)
PI Insurers One‑off – –
Financial Ombudsman Service One‑off – £0m
FSCS One‑off – £10.5m
FCA (midpoint) One‑off – £3.2m
Total One‑off £36.1m £22.1m

Note these costs include the Financial Ombudsman Service fees paid by firms to cover the Financial Ombudsman Service administrative
costs. Costs may not sum to total due to rounding.

As explained in the ‘Redress liabilities’ section below, Table 3 does not present redress
paid by advice firms as a cost. We do, however, present the part of the redress bill estimated to be paid by FSCS as costs.

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63. Our cost estimates are summarised in Table 4 below.
Table 4: Summary of costs for the s.404 redress scheme (central assumptions)
Entity Category Cost s.404
(Opt-out)
Counterfactual:
Current supervisory and enforcement approach Difference Firm Advice firms in scope Familiarisation and legal review £0.5m £0.0m £0.5m Training £0.3m £0.0m £0.3m Other compliance costs £3.9m £0.3m £3.6m File reviews £3.6m £1.0m £2.6m Cost of calculating redress £0.7m £0.2m £0.5m Financial Ombudsman Service and other costs relating to complaints* £0.9m £0.2m £0.7m Cost of redress payments See ‘Redress liabilities’
section
See ‘Redress liabilities’
section
See ‘Redress liabilities’
section
Other firms
FSCS redress pay-out recovered through levies £15.4m £5.2m £10.2m FSCS administrative costs recovered through levies £0.5m £0.2m £0.4m PI Insurers Claims £0.0m Regulators FCA Case review (midpoint) £3.2m £0.0m £3.2m Financial Ombudsman Service Administrative costs £0m Total £29.1m £7.2m £22.0m Note: Numbers are rounded to the nearest £100,000.

These costs include the case fee, compliance costs and redress calculation costs for upheld cases incurred by firms.
The Financial Ombudsman Service costs will be £0m because the Financial Ombudsman Service case fees of £750 are paid by firms.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Cost to firms Compliance costs Familiarisation and gap analysis
64. We expect firms will incur costs to familiarise themselves with our proposed rules,
including legal review of our rules on pre‑scheme checks and insistent clients. We draw on standardised assumptions to estimate these for all of the estimated 352 advice firms in scope of our proposal, comprising an estimated 3 large firms, 24 medium‑sized firms and 325 small firms. Taking into account the length of the document that firms will read and the legal instrument, we estimate these costs to be around £0.5m. Training
65. To comply with our proposal’s rules on assessing the suitability of advice set out in
the DBAAT we expect firms will incur costs to train their staff. We estimate that large, medium and small firms will respectively train 10, 5 and 1 staff member. Using our standardised assumptions, we estimate training costs of £0.3m. Other compliance costs
66. We estimate additional compliance costs to account for the elements of our proposal
regarding data reporting and monitoring, and attestations.
67. We estimate these costs will collectively require firms to incur the time of staff and/or
consultants. Assuming a ‘minor’ project according to our standardised assumptions, we apply total staff days of 540, 280 and 6 respectively for large, medium and small firms to derive an industry‑wide cost estimate of £3.9m. Cost of file reviews
68. Under our proposal, we estimate firms would have to review 3,600 transfers.
Multiplying the estimated cost of reviewing a transfer of £1,000 by the estimated number of transfers implies costs of around £3.6m under our proposal.
69. Under the counterfactual supervisory and enforcement approach, we estimate these
costs would be around £1m.
Costs of calculating redress
70. Firms are required to cover the costs of calculating redress for cases where advice was
found to be unsuitable (providing they have sufficient information from the consumer).
71. Of the 3,600 transfers that we estimate will be reviewed by firms under our proposal,
we estimate that in total around 1,100 will receive redress. This reflects our assumptions regarding unsuitability rate (46%), the probability of having suffered a financial loss (68%), and our assumption for the consumer response rate (62%). We estimate that 700 redress cases will arise directly from firms correctly identifying unsuitable transfers. Firms will incur £1,000 in costs per case, resulting in total costs of around £0.7m. Under our counterfactual scenario, we estimate these costs would be around £0.5m. Note around a further 400 upheld redress claims will arise from cases assessed by the Financial Ombudsman Service, of which the costs of calculating redress are reflected in the following section.

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72. As a simplifying assumption, we have estimated compliance costs for the other
options under consideration on a pro rata basis. These costs are included within the estimates for the counterfactual in Table 4. Financial Ombudsman Service fees for firms and compliance costs related to the complaints
73. Of the 3,600 transfers that we estimate will be reviewed by firms under our proposal,
we estimate that almost 500 consumers will complain to the Financial Ombudsman Service under our central scenario (based on our model using firm‑specific data). Firms will incur at least £1,250 in fees and compliance costs per complaint (noting that the Financial Ombudsman Service’s case fee is currently £750). Of these, we estimate 60% of cases will be upheld and sent back to firms for redress calculations. We therefore estimate total costs to firms of around £0.9m, which includes redress calculation costs for upheld cases. The number of transfers and cost estimates are inevitably subject to rounding error, which arises from applying rules to a stock rather than a flow of transfers individually.
74. Using the same calculation approach, under the counterfactual we estimate that less
than 100 consumers will complain, leading to fees and compliances costs of around £0.2m.
75. As part of our sensitivity analysis, we have attempted to estimate the maximum
possible compliance costs to firms associated with facilitated referral of suitable cases to the Financial Ombudsman Service. These maximum costs would arise if, following firms’ review, complaints about a suitability redress determination in relation to all 3,600 transfers were made to the Financial Ombudsman Service for review. Under this scenario, the overall compliance costs to firms would be up to £5m. (See also paragraph 95 of CP22/6.) This is not reflected in our model or in our central estimates. Redress liabilities
76. As in CP22/6, we do not consider that redress paid by advice firms should be recorded
as a cost of our proposal. Any redress costs payable by firms that are found to have given unsuitable advice to BSPS members would represent harm inflicted on consumers from past non‑compliance with our rules. If we considered such payments a cost, it is unlikely any redress mechanism would be able to generate benefits in excess of its costs without consideration of wider benefits (for example, confidence in the financial system) brought about by redress schemes. By contrast we do count compliance tasks as costs, since some of these would be incurred by both compliant and non‑compliant firms. This assumption is likely to mean we overestimate some elements of costs. Firm failure and FSCS costs
77. We have updated our estimates related to firm failure. Under the central scenario
we now estimate that around 40 (approximately 10%) of firms that arranged pension transfers for BSPS members and are in scope of the scheme, will become insolvent under our redress scheme proposal. These firms provided approximately 50% of BSPS DB transfers among firms that are in‑scope for the s.404 redress scheme.

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78. Under the counterfactual of our current supervisory approach, we estimate that fewer
than 10 firms that arranged pension transfer for BSPS members during the in‑scope time period and that are still active will become insolvent and exit the market.
79. Firm exit would result in redress liabilities being passed to FSCS. As a result of firm
exit, under our proposal we estimate that £15.4m (of the total redress cost) will be paid by FSCS under our central scenario, excluding FSCS administrative costs, which are around £0.5m. This compares to an estimated £5.2m and roughly £0.2m under the counterfactual. Our approach assumes that firms meet their FSCS liabilities up to the point where their capital is exhausted. Note that only residual liabilities are assumed to be sent to the FSCS.
80. Where we estimate firms will leave the market, it will be as a direct result of them
providing unsuitable advice to BSPS members. Redress costs are the principal determinant of whether a firm will exit or not. Redress will only be payable by firms whose past advice harmed consumers. We expect that small and medium sized advice firms, with lower capital resources are more likely to exit the market as a result of our proposal. Large, multi‑product financial firms are underrepresented in the BSPS transfer advice market and tend to be better capitalised. Costs to the Financial Ombudsman Service
81. As set out in paragraph 73, we estimate that around a further 500 consumers are likely
to complain to the Financial Ombudsman Service once the scheme is launched, under our central scenario. This results in cost to the Financial Ombudsman Service of £750 per complaint (or around £0.4m) that will be recovered from firms.
82. As part of our sensitivity analysis, and set out in paragraph 55, we have attempted
to estimate the maximum possible cost to the Financial Ombudsman Service. We have assumed that following firms’ review all transfers will be passed to the Financial Ombudsman Service under the facilitated referral, ie all 3,600 cases would be referred to the Financial Ombudsman Service. Under this scenario, the overall cost to the Financial Ombudsman Service will be up to £3m, and all these costs would be recovered from firms via the case fee. This is not reflected in our model or in our central estimates. Costs to the FCA
83. As in CP22/6, for our s.404 redress scheme we estimate that direct costs to the FCA
will be approximately £3.2m. These costs include reporting and firm monitoring, resources to collate and analyse data, and follow‑up work. We assume costs to the FCA of the counterfactual supervisory and enforcement work are already allocated and therefore are incorporated into business as usual. Wider impacts
84. In CP22/6 we carefully considered the potential impact of a s.404 redress scheme for
BSPS on the wider pension transfer and advice markets. That analysis remains valid. This section summarises our position and describes the additional analysis that we have undertaken since the original CBA.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme PII for BSPS‑related claims
85. Our CBA in CP22/6 acknowledged that PII cover for historical BSPS transfers may become
harder to obtain under a s.404 redress scheme relative to the counterfactual and that, potentially as a consequence and depending on the degree of market adaptation, some firms that advised BSPS members may need to raise additional capital while other firms for whom this is not feasible may be forced to leave the market.
86. Our CBA also concluded that the likelihood of any ‘contagion’ effects arising on PII
premiums for non‑BSPS DB transfer advice was uncertain, but we considered it unlikely because the necessary sequence of events to bring about ‘contagion’ following a redress scheme is highly indirect. As a consequence, we concluded that we did not believe there are strong probability‑driven reasons to expect a deterioration in the wider market for DB transfer advice as a result of our proposal, relative to existing trends under the counterfactual.
87. We have undertaken additional analysis since CP22/6 to further understand the
historical trend over time in PII premiums and conditions for pension transfer advice firms, and to understand the size of typical PII premiums in the context of the prices that firms charge for DB transfer advice.
88. We have found that PII premiums have risen faster since 2018 for DB‑active advisers
than for other financial advisers, suggesting that the PI insurance market has to some extent already priced in the perceived risk associated with DB transfer advice claims.
89. We have not been able to identify a clear relationship between adviser firms’ PII
premiums and the number of historical DB transfers they have advised, and hence not estimated a ‘per‑transfer’ PII premium. However, our analysis indicates that PII premiums are a significant but not dominant component of fees that firms charge for DB transfer advice, so even in a scenario where future DB PII premiums were to rise further, the effect on prices for and the market for DB transfer advice would be mitigated under plausible scenarios.
90. Similar to CP22/6 we estimate that under our s.404 redress scheme around 2% of
firms that currently offer DB transfer advice, representing around 1% of DB to DC transfers, will leave the market under our central scenario. These firms all provided unsuitable DB transfer advice to at least one BSPS member. These estimates represent a small reduction in the supply of financial advice, both for DB transfers and the other services that those advisers provide. Given the small number of firms estimated to exit and given that a significant number of advice firms have low exposure to BSPS customers, this effect is likely to be small. Therefore, we believe that our conclusion in the original CBA—that any effects of our proposal on the wider DB pension transfer advice market are likely be very limited—remains valid. Benefits
91. The primary benefit of the s.404 redress scheme is the redress that consumers would
receive (Table 5). We estimate that around 1,100 consumers will receive redress under our scheme.

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Table 5: Summary of benefits for the s.404 redress scheme
Category s.404 opt‑out
(our scheme)
Counterfactual – current supervisory approach Difference Consumer Compensation received £49m £12.9m £36.1m Total £49m £12.9m £36.1m
92. The benefits above represent a transfer from firms to consumers. However, the benefits
of our proposal can also be conceived of as correcting previous market failures. The redistributive aspect of compensation is consistent with our consumer protection objective to ‘undo’ previous harm and may be considered a benefit in and of itself. Wider benefits
93. As we discussed in paragraphs 120‑123 of Annex 2, CP22/6, other wider benefits
might accrue as a result of our intervention. We discussed two improvement areas in particular: (i) consumer trust in financial advice and financial markets and (ii) quality of pension transfer advice. We still consider these factors to be relevant but not reasonably practicable to quantify and, overall, not to be significant in influencing the choice of policy option. Other options
94. This section presents our cost and benefit estimates for the other options under
consideration.
95. Our estimates of the costs and benefits for the alternative options is based on the same
modelling methodology used for our proposal. However, we have assumed each option generates different consumer responses. These are set out in Annex 3 to CP22/6.
96. Table 6 contains our central estimates of the costs and benefits of the alternative
options under consideration. Our enhanced supervision option (set out in Chapter 2 of this Policy Statement) builds on and extends the current supervisory approach, so the presented estimates are a sum of the enhanced and current supervisory options.
Table 6: Summary of costs under different intervention options
Category Measure
Counterfactual:
Current supervisory and enforcement approach s.404 with opt‑out (our scheme) s.404 with opt‑in Enhanced supervision (including current supervisory approach) Enhanced communications Scale Number of consumers in scope 1,000 3,600 3,600 2,100 3,600 Number of consumers that receive redress 300 1,100 1,000 500 100

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Category Measure Counterfactual:
Current supervisory and enforcement approach s.404 with opt‑out (our scheme) s.404 with opt‑in Enhanced supervision (including current supervisory approach) Enhanced communications Cost – administrative Firms (compliance) £1.5m £5.5m £5.4m £3.3m £0.6m FCA £0.0m £3.2m £2.0m £0.7m £0.4m Financial Ombudsman Service £0m FSCS (administrative) £0.2m £0.6m £0.5m £0.5m £0.1m Cost – redress related FSCS (redress) £5.2m £15.4m £13.7m £12.9m £1.8m PI Insurers £0.0m Benefits Consumers £12.9m £49m £45.4m £24.8m £4.7m Benefits less administrative cost of the scheme £11.2m £39.7m £37.5m £20.4m £3.7m
97. The number of consumers that actually receive redress under each option will differ
according to the consumer response rate. As set out in Annex 3 of CP22/6, we expect that the consumer response rate for the opt‑in proposal will be lower than under the opt‑out proposal, meaning fewer advisers will assess the suitability of fewer transfers and fewer consumers will receive redress.
98. For all the options considered, the benefits to consumers who were provided
unsuitable advice to transfer out of BSPS will be the direct transfer of redress from their advice firm (or other firms via FSCS, in cases where firms fail).
99. Costs to the FCA for each option reflect the additional supervisory and regulatory
costs. For the communications outreach options, costs to the FCA would involve the commission of enhanced communication through partners and outreach, including in‑person events with other members of the regulatory family. This would be supported by consumer tracking to evaluate the effectiveness of the communications. We estimate nearly £400,000 of FCA resource cost would be required for enhanced engagement and to mitigate the risk that firms will not resolve complaints appropriately to ensure fair outcomes for consumers. Comparison of options
100. We estimate our proposal of a s.404 redress scheme with opt‑out to have the highest
net benefits less administrative costs of the scheme. Our estimates of benefits under central assumptions are set out in Table 6. We estimate benefits less administrative costs of £39.7m under a s.404 redress scheme with opt‑out, and of £37.5m under a redress scheme with opt‑in. This difference is a result of a higher estimated consumer response rate under the opt‑out scheme than under the opt‑in scheme. These two figures are very similar, but we note that our estimated consumer redress benefits are around £3.6m higher under the opt‑out version. We consider the uncertainty behind our estimates will affect the two s.404 options in similar ways, and therefore a preference for the higher estimated redress under an opt‑out scheme is the most proportional choice. Both benefits and benefits less administrative costs are higher under the s.404 options than the others we have considered.

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Annex 2
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Annex 2
Revised KC opinion
Section 404 Scheme for British Steel Pension Scheme Members
Further Opinion

I am asked to advise the Financial Conduct Authority (“FCA”) on proposals for a redress
scheme under section 404 of the Financial Services and Markets Act 2000 (“FSMA”) for former British Steel Pension Scheme (“BSPS”) members (“the Proposed Scheme”). This Further Opinion supplements the Opinion on the Proposed Scheme which I provided on 29th March 2022 (“the Main Opinion”), and should be read together with the Main Opinion.
Since preparing the Main Opinion, I have been provided by the FCA with copies of the
key responses to the consultation which took issue with one or more aspects of the Proposed Scheme. I have also seen in draft the Policy Statement prepared by the FCA which addresses the consultation responses, and explains the approach which the FCA has taken.
It is apparent from the draft Policy Statement that very detailed and careful
consideration has been given to the large number of consultation responses received. I note, for example, that thought has been given to whether the conditions for the Proposed Scheme continue to be met in light of both responses received and changes in external circumstances, most notably developments in the wider economy impacting redress levels and changes to the FCA’s understanding of the availability of insurance cover.
Overall, I have also scrutinised the approach taken, and I continue to consider that
the Proposed Scheme complies with the requirements of s. 404. I note that minor and consequential changes have been made to the Proposed Scheme in light of the responses received and I consider these to be appropriate. In particular, I remain of the view that the failures which would be addressed by the Proposed Scheme are those that a court or tribunal would find to constitute a failure to comply with a requirement, or as indicators of such a failure. Jemima Stratford KC Brick Court Chambers 18th November 2022

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Annex 3
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Annex 3
Revised Statistician’s Report
Report on file review sampling methodology and analysis of file review data with revisions to cover the period 26th May 2016 to 28th February 2017 Background I was commissioned by the FCA to establish with reasonable certainty the percentage of transactions that involved unsuitable advice to transfer from BSPS, and to establish with reasonable certainty whether unsuitable advice was widespread across firms. I was also asked to provide independent analysis of the results of the file review process and commentary from a statistical perspective. My advice on sample design was provided in three stages (1) during the FCA’s fourth multi‑firm review of DB transfer advice in ‘higher risk firms’ (2) during the FCA’s further investigations of advice given to BSPS members to establish a market‑wide picture of the quality of advice given to BSPS members for the period 1 March 2017 to 31 March 2018, and (3) during additional investigations of advice given to BSPS members for the earlier period of 26 May 2016 to 28 February 2017. I have previously reported on the findings from the first two stages. This report updates the previous report, adding in the sample data from the earlier period. This report also takes into account revisions made to the outcome of the assessments for two of the files in the initial exercise.1 The higher risk firms included in the fourth multi‑firm review and previous work on the BSPS are labelled Group 1 in the text below. The firms included in the further investigations are labelled Group 2. The analysis of the results combines the data from these two groups. The relevant ‘population’ for the review is transfers that took place between 26th May 2016 and 31 March 2018, which is the period before and during the Time to Choose period. The FCA estimate that around 8,160 members transferred out of their BSPS pension during that period with around 7,738 having received advice. The exact number of firms giving advice is not known but is believed to be between 385 and 502. The population of firms divides into three groups. Groups 1 and 2 are as described above (36 firms and 3,389 transfers in Group 1, and 309 firms and 3,301 transfers in Group 2). There is a third group (‘Group 3’) made up of an estimated 55 to 172 firms who were responsible for around 1,000 transfers. There is no available list of Group 3 firms, so Group 3 firms and their transfers were not included in the file review exercise. 1 This is following reconciliation on some of the files where the FCA identified that the pension transfer outcome on two cases moved from unsuitable to suitable.

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Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Summary The analysis presented in this paper is based on a review of 392 files drawn from 101 firms. This is made up of 309 files from 36 Group 1 (‘higher risk’) firms, and 83 files drawn from a total of 70 Group 2 firms.2 For the Group 1 sample, 302 files were drawn from the period 1 March 2017 to 31 March 2018 and seven from the period 26 May 2016 to 28 February 2017. For the Group 2 sample, 63 of the 83 cases were drawn from the period 1 March 2017 to 31 March 2018 and 20 from the period 26 May 2016 to 28 February 2017. All of the 392 files were reviewed, and the advice given judged to be either suitable, unsuitable, or not compliant – unclear. ‘Grossing3 ’ the findings from the sample up to the total population of firms and transfers in Groups 1 and 2 gives an estimate of the percentage of all transfers that involved unsuitable advice. The key findings from the analysis are:

Across the sample of 392 files, 153 were found to have involved unsuitable
advice (121 of the 309 files from Group 1, and 32 of the 83 files from Group 2).
Grossing the sample to the total of 6,690 Group 1 and 2 transfers suggests
that 46% of the transfers involved unsuitable advice (41% for the 3,389 Group 1 transfers, and 51% for the 3,301 Group 2 transfers). The 95% confidence interval around the 46% is (39%, 52%). Informally and in summary, the confidence interval represents a ‘plausible range’ for the underlying percentage of ‘unsuitable advice’. That is, the sample provides strong evidence that the underlying rate is at least 39% and it is less than 52%. The evidence points to 46% as the best point estimate.
The analysis included checks on whether the percentage of unsuitable files
differed by: the total number of transfers dealt with by the firm; the estimated conversion rate for the firm; whether or not there is ongoing ‘past business review’ work in respect of the firm; and by the date of advice. The percentage unsuitable was found to be broadly the same across all the sub‑groups with two exceptions:
– Firms with under 10 transfers were found to have a lower estimated rate of unsuitability, at 19% (95% confidence interval 6% to 50%). The sample size of files for this group is however fairly small, so there is material uncertainty around this finding; – The files where advice was given in January to March 2018 have a lower estimated rate of unsuitability, at 25% (95% confidence interval 12% to 45%) compared with 51% for the files from March 2017 to Dec 2017.
The number of files reviewed per firm was very small, especially for Group
2 where just one file was reviewed for the majority of firms in the sample. Nevertheless, at least one transfer involving unsuitable advice was found for 52 of the 101 firms in the sample (25 of the 36 Group 1 firms, and 28 of the 70 Group 2 firms). This strongly suggests the problem of unsuitable advice is widely distributed across firms. 2 Five firms in the sample are labelled as Group 1 for the period March 2017 – March 2018 but as Group 2 for the earlier period. 3 Details on how the grossing was done are included in the Appendix.

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Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme These statistics change very little from the statistics in the report appended to the consultation. The overall percentage unsuitable stays the same, at 46%. Other statistics change by at most one or two percentage points. This lack of change is because the number of transfers from the period that has been added (26 May 2016 to 28 February 2017) is only a small percentage of all transfers from Group 1 and Group 2, at just 2.5%. Findings from this period have very little influence on the overall percentages. The finding of 19% unsuitable for the firms with under 10 transfers is the same as in the previous report. However, the fact that the sample size is now slightly bigger for this sub‑group means that this unsuitability percentage is now significantly lower on a statistical significance test, than the percentage for the firms with more transfers. Nevertheless, the confidence interval around the 19% is extremely wide, and there is still considerable uncertainty around the exact percentage for the under 10 group. The statistics presented in this report are strictly valid only for the transfers in the Group 1 and 2 firms. The approximate 1,000 transfers from an estimated further 55 to 172 firms (Group 3) are not covered. If the behaviour of the Group 3 firms is similar to that of the Group 1 or 2 firms, the results presented here can be used to draw inference to the whole population of over 7,000 transfers. But any assumption of ‘similar behaviour’ cannot be tested using the data available. However, it is the view of the FCA that the Group 3 firms are very unlikely to be systematically different in their behaviours to the Group 2 firms but that they may, on average, have tended to deal with relatively small numbers of transfers. If so, the percentage of unsuitable files for Group 3 is likely to be similar to the percentage for the firms in Groups 1 and 2 with the lowest number of transfers. The data The analysis presented in this report is based on a review of 392 files from 36 Group 1 firms and a stratified random sample of 83 files from across 70 Group 2 firms. The sampling procedures differed for the two groups, the details being given in the technical appendix. The approach taken for each Group is summarised below. Group 1 Group 1 consists of firms sampled during the FCA’s project work on the BSPS in November 2017 to March 2018 and fourth multi‑firm review of firms active in the DB transfers market, which covered those firms most active in the DB transfer market from April 2015 to September 2018. Some of the files reviewed by the FCA included advice given to members of the British Steel Pension Scheme. In total, 212 of the 309 files selected from Group 1, from across 29 of the 36 firms, were selected as part of the fourth multi‑firm review, with these files being drawn at random from the firms’ business register. The remaining 97 files were not
drawn at random but appear to be reasonably representative so have been included in the analysis reported here.4 4 A sensitivity check based on the data for the 1 March 2017 to 31 March 2018, based just on the randomly selected files, suggests that if the non‑random cases were excluded the percentage unsuitable for Group 1 would have increased to 45%. That is, the non‑random cases were more likely to be ‘suitable’ and their inclusion brought the percentage unsuitable down. Including the non‑random cases is therefore conservative. I judged it preferable to include non‑random cases, so that all 36 firms were represented in the analysis, rather than exclude seven firms without random cases.

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Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Group 2 The Group 2 data consists of a stratified random sample of 83 files from firms who gave DB transfer advice to BSPS members from 26 May 2016 to 30 September 2018. The 83 files between them came from 70 firms. An initial sample of 63 files (from 53 firms) was selected from the period 1 March 2017 to 31 March 2018. An additional sample of 20 files (from 20 firms) was subsequently selected from the period 26 May 2016 to 28th February 2017.5 For 58 of the firms just one file was selected; for 11 firms two files were selected, and for one firm, three files were selected. Efforts were taken to ensure the sample of 83 files covered reasonable numbers from firms with the smallest numbers of transfers, and from firms with different conversion rates. File level analyses The analysis described below covers the whole of the period 26 May 2016 to 31 March
2018. Tables that restrict the analysis to the shorter period of 1 December 2016 to
31 March 2018 are included as Appendix A.
Overall estimates of unsuitability, by Group 1 and 2, and for firms that remain Authorised by the FCA Across the total sample of 392 files, 153 were found to have involved unsuitable advice (121 of the 309 files from Group 1, and 32 of the 83 files from Group 2). A further 92 were found to be non‑compliant‑unclear, leaving just 147 ‘suitable’. Grossing the sample to the total of 6,690 Group 1 and 2 transfers suggests that 46% of the transfers involved unsuitable advice (41% for the 3,389 Group 1 transfers, and 51% for the 3,301 Group 2 transfers). The 95% confidence interval around the 46% is (39%, 52%). In terms of the total number of transfers involving unsuitable advice, this equates to 3,057 from a total of 6,690. For firms that remain Authorised by the FCA the estimated percentage unsuitable is 45% with a 95% confidence interval of (38%, 52%). Excluding insistent client cases from the sample increases the percentage unsuitable to 48% with a 95% confidence interval of (41%, 54%). The details are shown in Table 1. 5 Five of the files selected from this earlier period were from firms that were in the Group 1 list for the post March 2017 sample period. These earlier files were selected independently of the fourth multi‑firm review exercise so have been assigned to Group 2 in this report.

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Annex 3
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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Table 1: Pension transfer suitability overall, and by groups 1 and 2
Grossed data
Grossed number of transfers %
95% CI
(%)
Sample size (files/ firms)
All 392/101
Suitable 2,708 41 (35,47)
Unsuitable 3,057 46 (39,52)
Not compliant/Unclear 924 14 (10,18)
Total 6,690
Group 1 309/36
Suitable 1,351 40 (36,44)
Unsuitable 1,375 41 (36,46)
Not compliant/Unclear 662 20 (16,24)
Total 3,389
Group 2 83/70
Suitable 1,357 41 (30,53)
Unsuitable 1,682 51 (40,62)
Not compliant/Unclear 262 8 (3,17)
Total 3,301
Firm which remain Authorised by the FCA 320/96 Suitable 2,665 46 (39,53) Unsuitable 2,640 45 (38,52) Not compliant/Unclear 540 9 (6,14) Total 5,843 Excluding insistent client cases 354/99 Suitable 2,592 41 (34,47) Unsuitable 3,048 48 (41,54) Not compliant/Unclear 736 12 (8,16) Total 6,376

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Estimates of unsuitability by the number of transfers per firm To test, firstly whether unsuitable advice occurred across the market, and secondly whether there was a relationship between the rate of unsuitability and the number of transfers a firm advised on, the sample data was divided by the number of transfers per firm, using the following splits:

70 or more transfers
10‑69 transfers
Under 10 transfers.
For firms with 10 or more transfers, the percentage unsuitable is similar for the two size groups, at around 50%. However, for the firms in the ‘up to 10’ group, the sample data suggests that the rate of unsuitability is lower, at 19%. That is, on a statistical test, this group has a ‘significantly’ lower rate of unsuitability than the rate for firms advising on more transfers. The 95% confidence interval around the 19% is, however, very wide, at (6%, 50%) so there is still considerable uncertainty around the exact percentage for this group.6
Table 2: Pension transfer suitability by number of transfers per firm
Grossed data
Grossed number of transfers %
95% CI
(%)
Sample size (files/ firms)
Firms with 70 or more transfers 268/30
Suitable 1,591 38 (32,45)
Unsuitable 1,976 47 (41,53)
Not compliant/Unclear 643 15 (12,20)
Total 4,210
Firms with 10 to 69 transfers 91/40
Suitable 734 39 (24,56)
Unsuitable 967 51 (35,67)
Not compliant/Unclear 184 10 (4,22)
Total 1,886
Firms with up to 10 transfers 33/31
Suitable 383 65 (37,84)
Unsuitable 114 19 (6,50)
Not compliant/Unclear 96 16 (5,41)
Total 593
6 The p‑value from the test of difference between the unsuitability rates for the above 10 and below 10 groups is 0.046. This means that using the standard 0.05 significance level we can reject the null hypothesis that the rates are equal.

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Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Estimates of unsuitability by the date of the advice
Table 3 divides the data into five groups, based on the date of advice given. The
percentage unsuitable is estimated to be higher (at 67%) for the period May 2016 to February 2017 than for the following periods, but the difference is not statistically significant. However, the rate for 2018 is lower at 25% (with a 95% confidence interval of 12% to 45%).7
Table 3: Pension transfer suitability by date of advice given
Grossed data
Grossed number of transfers %
95% CI
(%)
Sample size (files/ firms)
May 2016 – Feb 2017 27/25
Suitable 28 16 (6,38)
Unsuitable 115 67 (40,86)
Not compliant/Unclear 28 16 (6,36)
Total 171
March 2017 – June 2017 14/9
Suitable 56 27 (9,57)
Unsuitable 98 47 (23,73)
Not compliant/Unclear 55 26 (10,53)
Total 209
Jul 2017‑Sep 2017 70/24
Suitable 379 35 (23,50)
Unsuitable 475 44 (30,60)
Not compliant/Unclear 221 21 (12,34)
Total 1,075
Oct 2017 – Dec 2017 192/68
Suitable 1,276 33 (25,42)
Unsuitable 2,065 53 (45,62)
Not compliant/Unclear 529 14 (9,20)
Total 3,870
Jan 2018‑Mar 2018 41/28
Suitable 670 68 (49,83)
Unsuitable 249 25 (12,45)
Not compliant/Unclear 62 6 (3,13)
Total 981
7 This difference reaches significance on a formal statistical test (p=0.015).

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Annex 3
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Estimates of unsuitability by the conversion rate and whether there is ongoing past business review work Additional analyses, looking at whether the unsuitability rate varied by the firm level conversion rate or whether there is ongoing past business review work, did not identify any strong evidence of difference in either respect. Firm level analyses The sample was not designed to generate estimates of the degree of unsuitability for individual firms. For many of the firms in the sample, especially those in Group 2, just one file was selected for review. Essentially, a large sample of firms were ‘dipped in to’ to establish the overall prevalence of unsuitability across the market, but these dips do not allow for the number of firms that have high levels of unsuitably to be established. Nevertheless, the distribution of the collected data does suggest that unsuitability is widespread across firms, with the possible exception of firms with just a small number of transfers.8 Across the 101 firms in the sample, the ‘dip’ found at least one unsuitable file for 52 (51%) of these firms (25 of the 36 Group 1 firms, and 28 of the 70 Group 2 firms9 ). 8 For the 31 firms in the sample with under 10 transfers, an unsuitable file was selected for seven of them. This is consistent with the finding discussed earlier that these firms seem to have a slightly lower overall percentage unsuitable. 9 As was noted earlier, five firms are included as Group 1 for the March 2017 – March 2018 period as Group 2 for the earlier period.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Appendix A: Tables for the period 1 December 2016 to 31 March
Table A1: Pension transfer suitability overall, and by groups 1 and 2
Grossed data
Grossed number of transfers %
95% CI
(%)
Sample size (files/ firms)
All 373/92
Suitable 2,689 41 (35,47)
Unsuitable 2,987 45 (39,52)
Not compliant/Unclear 900 14 (10,18)
Total 6,576
Group 1 304/36
Suitable 1,349 41 (37,45)
Unsuitable 1,313 40 (35,45)
Not compliant/Unclear 662 20 (16,24)
Total 3,324
Group 2 69/57
Suitable 1,340 41 (30,54)
Unsuitable 1,674 52 (40,63)
Not compliant/Unclear 238 7 (3,17)
Total 3,251
Firm which remain Authorised by the FCA 304/87 Suitable 2,648 46 (39,53) Unsuitable 2,592 45 (38,52) Not compliant/Unclear 514 9 (6,14) Total 5,754

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Table A2: Pension transfer suitability by number of transfers per firm
Grossed data
Grossed number of transfers %
95% CI
(%)
Sample size (files/ firms)
Firms with 70 or more transfers 262/30
Suitable 1,586 38 (33,44)
Unsuitable 1,920 46 (40,52)
Not compliant/Unclear 641 16 (12,20)
Total 4,147
Firms with 10 to 69 transfers 85/38
Suitable 730 39 (24,56)
Unsuitable 956 51 (35,68)
Not compliant/Unclear 173 9 (4,22)
Total 1,859
Firms with up to 10 transfers 26/24
Suitable 373 66 (37,86)
Unsuitable 111 19 (5,51)
Not compliant/Unclear 86 15 (4,41)
Total 569

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Table A3: Pension transfer suitability by date of advice given
Grossed data
Grossed number of transfers %
95% CI
(%)
Sample size (files/ firms)
Dec 2016 – Feb 2017 8/8
Suitable 9 15 (4,47)
Unsuitable 44 78 (44,94)
Not compliant/Unclear 4 7 (1,34)
Total 57
March 2017 – June 2017 14/9
Suitable 56 27 (9,57)
Unsuitable 98 47 (23,73)
Not compliant/Unclear 55 26 (10,53)
Total 209
Jul 2017‑Sep 2017 70/24
Suitable 379 35 (23,50)
Unsuitable 475 44 (30,60)
Not compliant/Unclear 221 21 (12,34)
Total 1,075
Oct 2017 – Dec 2017 192/68
Suitable 1,276 33 (25,42)
Unsuitable 2,065 53 (45,62)
Not compliant/Unclear 529 14 (9,20)
Total 3,870
Jan 2018‑Mar 2018 41/28
Suitable 670 68 (49,83)
Unsuitable 249 25 (12,45)
Not compliant/Unclear 62 6 (3,13)
Total 981

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Appendix B: Technical appendix
Sampling of files
Sampling of files from Group 1 firms
Overall, 309 files were selected from the 36 firms in Group 1. The number selected per firm varied from just one to 22, around an average of nine. Of the 309 files, 212 were selected within firms ‘at random’. The remaining 97 were non‑random. Of the 36 firms, 29 had at least some random sample. For the remaining seven all sampling was non‑random. The analysis reported on here includes both the random and non‑random samples, although a sensitivity analysis was conducted on the post February 2017 data to ensure the non‑random files did not lead to bias. This analysis suggested that if the non‑random cases were excluded the percentage unsuitable for Group 1 would increase from 39% to 45% for that time period. That is, the non‑random cases seemed to be somewhat biased towards ‘suitable’. Including the non‑random cases is therefore conservative and leads to a lower percentage unsuitable. How to deal with the non‑random cases is a judgement call. On balance it seemed preferable to include non‑random cases, so that all 36 firms were included in the analysis to ensure full coverage, rather than exclude seven firms without random cases and gross up the data from the other Group 1 firms to cover them. Sampling of files from Group 2 firms The Group 2 sample comprises 63 files drawn from a stratified random sample of 53 firms (from a Group 2 ‘population’ of 295 firms) for the period March 2017 to March 2018 and a stratified random sample of 20 files (from 20 firms) for the period May 2016 to February 2017. In drawing the March 2017‑March 2018 sample, the population of 295 firms was divided into strata (i.e. groups) based on a. their numbers of transfers (1; 2; 3‑4; 5‑9; 10‑19; 20‑29; 30‑49; 50‑69; 70‑99; 100‑150; plus two firms with more than 150 transfers that were each assigned to individual strata); and b. the estimated conversion rates (Under 50%; 50% to just under 75%; 75% and above; unknown conversion rate). This division gives 37 strata in total, some of the ‘size by conversion rate’ combinations being unpopulated. A small random sample of firms was selected within each of the 37 populated strata, typically just one or two, to a total of 53 firms. Within each selected firm a pre‑specified number of files was selected, again at random. For 44 of the firms just one file was selected; for eight of the larger firms two files were selected, and for one firm (the firm that had conducted the most transfers in the Group 2 population and represented almost 8% of all transfers in Group 2), three files were selected.

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Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme The sampling fraction for files was set slightly higher than average within the strata covering firms with under 10 transfers or a conversion rate of under 75%. This was to ensure a sample of at least 20 files in these two sub‑divisions of the Group 1 population, sufficient to allow for a test of whether unsuitability rates varied by number of transfers or conversion rate. For the May 2016‑February 2017 sample the population was divided into strata based on the number of transfers (1; 2; 3‑4; 5‑10) and conversion rate (under 100%; 100%) and 20 firms selected, at random, from the stratified list. One file was selected per selected firm, again at random. Grossing the data The raw sample data from Groups 1 and 2 does not automatically represent the population of transfers. Firstly, the sample from Group 1 is proportionately too large relative to Group 2. And secondly, the Group 2 sample has, as described above, some inbuilt over‑sampling to ensure a sufficient sample size in smaller firms and firms with conversion rates of below 75%. To address this, the data has been weighted. To apply weights is a statistical means of re‑adjusting or re‑balancing a sample, so as to be reflective of the population from which the sample was drawn. The weights are calculated as the inverse of the probability of selection per file. Files with a low probability of selection are given a large weight; files with a high probability of selection are given a smaller weight. The probability of selection is calculated as the probability of selection for the firm multiplied by the probability of selection for a file within the firm. So, for example, if a firm in Group 2 had a one in two chance of selection, and one file was selected from a total of 10 for that firm, the probability of selection for the file would be 0.5*0.1=0.05. The weight is then 1/0.05=20.10 Note that for Group 1 firms, their probability of selection equals one, so only the probability of selection within those firms is relevant. The weights can be thought of as ‘grossing weights’. That is, once applied they give grossed estimates of the number of transfers in the Group 1 and 2 population that are unsuitable.11 The calculation of confidence intervals The confidence intervals presented in this report have all been calculated in the complex samples module of IBM SPSS Statistics Version 26. The calculation takes into account the nesting of the samples of files within a sample of firms, the grossing weights, and the Group 2 stratification. 10 This approach, although technically correct, led to very large weights for two Group 2 files. In the first case, one large firm was not included in the sample and the other firm from the same stratum was calculated to have a large weight to compensate. For the second case, the number of transfers identified at the sampling stage was much larger than in the original files, so
the probability of selection within this firm was particularly low. These large, outlier, weights lead to these two files having too much leverage on the results, so their weights have been trimmed (by a factor of about two). 11 The inverse probability weights after trimming gave a grossed total for Group 2 of 3,036 for period March 2017‑March 2018. The weights were scaled by a factor of 3,234/3,036 to give a grossed total of 3,234, this being the FCA’s best estimate of the total number of transfers for Group 2 for this period.

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Appendix C: Author biography
Dr Susan Purdon is a professional statistician with a PhD in Mathematics (University of Glasgow, 1990) and an MSc in Applied Statistics (Sheffield Hallam, 1994). She has worked as a statistician for over 25 years, but between 1993 and 2009 worked at the National Centre for Social Research, where she was head of the Evaluation Unit and subsequently head of the Survey Methods Unit. In the latter position she was head of the team of statisticians in the organisation. In 2009 she left NatCen to set up an independent research partnership (BPSR). She is a fellow of the Royal Statistical Society. Dr Purdon has very considerable experience in complex sample design and analysis and has been responsible for sample design for a considerable number of surveys, trials and evaluations. Most have been studies for government, and include a number of very high‑profile studies, such as the Health Surveys for England and Scotland, the Adult Psychiatric Morbidity Survey, and the Workplace Employee Relations Survey. Although most of her sampling work has been around the sampling of individuals, the principles are the same when applied to other units (in this instance, transfers), and these principles have been applied here.

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Annex 4
List of non‑confidential respondents to CP22/6 75point3 Limited Abacus Money Management Ltd Abrdn plc Acumen Independent Financial Planning Ltd Adam Wilfred Samuel AEON Financial Services Ltd Age Partnership Wealth Management AJH Financial Services Ltd Anstee & Co Anthony Way Association of Pension Transfer Specialists Association of Professional Compliance Consultants Axiom Financial Services Ltd bdhsterling Ltd British Steel Advisory Group CGR Wealth Management Chapelwood Financial Planning Limited Christina Clegg Financial Planning Services Ltd Community Trade Union Corporate Solutions NI Ltd Create Wealth Management Ltd Creative Benefit Wealth Management Limited CST Wealth Management Limited

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Annex 4
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme D S Howell Financial Services Darran Jenkins Davies Financial Ltd David Neilly Dobson & Hodge Ltd Dragon Financial Planning Ltd Edesia Law Limited Edward Asset Management LLP Elliot Fletcher Ltd Ellis Lloyd Jones FS Ltd E S Walton & Co Ltd Financial Fortress Ltd Financial Services Consumer Panel Financial Strategies Limited Financial Synergy Ltd Fowler Drew Limited Fraser Backhouse LLP Future Asset Management LLP Gareth Baxter Gary Southall Grange Financial Planning Ltd Green Gem Financial Limited I Planning Wealth Management Ltd Ian Gravel Independent Personal Financial Management Ltd Innes Reid Investments Limited Inperio (London) Limited

PS22/14
Annex 4
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme International Underwriting Association and Reynolds Porter Chamberlain LLP Jacobs and Harris Ltd Jewell & Petersen Ltd John Tamblin Financial Services Ltd Jon Short Kerry Lee Walker Langley Consultancy Services Lowes Financial Management Ltd Members of Parliament – joint response Michael OBrien Millen Compliance Ltd Montfort International M&G Wealth Advice Network New South Law Ltd N2 Asset Management Limited and 4TheRecord Compliance Limited OAC PLC Oakhouse Financial Services OCM Wealth Management Origen Financial Services Pensionhelp Limited Personal Finance Society Personal Investment Management & Financial Advice Association Planet 3 Wealth Portal Financial Planning Ltd Priswm Limited Professional Pensions and Investments Ltd Prosser Knowles Associates Ltd

PS22/14
Annex 4
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme QED Financial Associates Ltd Red Circle Financial Planning Limited Redwood Financial Family Wealth & Estate Planners Limited Richard Caddy Rutland Independent Wealth Management LLP Savio Santimano Scott Llewellyn SimplyBiz Stepping Stones Wealth Management Ltd Sterling Financial Services Limited St James’s Place plc Taurus Global Financial Advisers Ltd Tenet Group Limited The Catt’s Eye View The IFA Corporation Ltd/TIFAC IFA Compliance & Regulatory Support Services threesixty Services LLP Tideway Investment Partners LLP Truly Independent Waterbridge Financial Planning Ltd Wayne Julian Davies Westcourt Financial Services Ltd WPS Financial Group Ltd Your Financial Planning Ltd

PS22/14
Annex 5
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Annex 5
Abbreviations used in this paper
Abbreviation Description
BSPS British Steel Pension Scheme
BSPS2 new British Steel Pension Scheme
CBA cost benefit analysis
CETV cash equivalent transfer value
CMC claims management company
COBS Conduct of Business Sourcebook
CONRED Consumer Redress Schemes sourcebook
CP Consultation Paper
DB defined benefit
DC defined contribution
DBAAT Defined Benefit Advice Assessment Tool DWP Department for Work and Pensions FCA Financial Conduct Authority FSCS Financial Services Compensation Scheme FSMA Financial Services and Markets Act 2000 KC King’s Counsel PBR Past Business Review PI Professional Indemnity PIC Pension Insurance Corporation PII Professional Indemnity Insurance PPF Pension Protection Fund

PS22/14
Annex 5
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme Abbreviation Description PTS Pension Transfer Specialist s.404 Section 404 of the Financial Services Markets Act 2000 TTC Time To Choose TVAS Transfer Value Analysis Software All our publications are available to download from www.fca.org.uk. If you would like to receive this paper in an alternative format, please call 020 7066 7948 or email:
publications_graphics@fca.org.uk or write to: Editorial and Digital team, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN Sign up for our news and publications alerts

PS22/14
Appendix 1
Financial Conduct Authority
Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme
Appendix 1
Made rules (legal instrument)

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BRITISH STEEL PENSION SCHEME CONSUMER REDRESS SCHEME INSTRUMENT 2022 Powers exercised A. The Financial Conduct Authority (“the FCA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137A (The FCA’s general rules); (2) section 138C (Evidential provisions); (3) section 137T (General supplementary powers); (4) section 139A (Power of the FCA to give guidance); (5) section 395(5) (The FCA’s and PRA’s procedures); (6) section 404(3) (Consumer redress schemes); (7) section 404A (Rules under s404: supplementary); and (8) paragraph 23 (Fees) of Part 3 (Penalties and Fees) of Schedule 1ZA (the Financial Conduct Authority). B. The rule-making powers listed above are specified for the purposes of section 138G(2) (Rule-making instruments) of the Act. Commencement
C. This instrument comes into force on 28 February 2023.
Amendments to the Handbook
D. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes in this instrument listed in column (2) below. (1) (2) Glossary of definitions Annex A Fees manual (FEES) Annex B Consumer Redress Schemes sourcebook (CONRED) Annex C Notes E. In this instrument, the “notes” (indicated by “Note:” or “Editor’s note:”) are included for the convenience of readers but do not form part of the legislative text. Citation F. This instrument may be cited as the British Steel Pension Scheme Consumer Redress Scheme Instrument 2022. By order of the Board 24 November 2022

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Annex A
Amendments to the Glossary of definitions
In this Annex, underlining indicates new text.
Amend the following definition as shown. proposed arrangement (for the purposes of COBS 19 and CONRED 4), refers to the arrangement with flexible benefits to which the retail client would move and takes into account the subsequent intended pattern of decumulation; …

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Annex B
Amendments to the Fees manual (FEES)
In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Application, Notification and Vetting Fees …
3.2 Obligation to pay fees
…
3.2.7 R Table of application, notification and vetting and other fees payable to the
FCA
Part 1A: Application, notification and vetting fees
(1) Fee payer (2) Fee payable (£) by reference to the pricing category in FEES 3 Annex 1AR. Due date … (zn) [deleted] … (zo) In the case of persons in respect of which the FCA has given notice of its intention to take, or appoint a competent person to take, any steps under CONRED 2.5.12R or 4.5.1R, either:
(i) a Firm (as defined in
CONRED 2.1.1R(1)) or
4.1.3R; or
(ii) a person falling within
CONRED 2.1.2R(1) or 4.1.5R.
An amount equal to:
(1) a sum determined by the number of hours, or part of an hour, taken by the FCA in relation to work conducted in taking steps under CONRED 2.5.12R or 4.5.1R recorded on the FCA’s systems, multiplied by the rate in FEES 3 Annex 9 (11)R; or (2) any amount invoiced to the FCA by a competent person in relation to any work carried out by that competent person in connection with its appointment by the FCA under CONRED 2.5.12R or 4.5.1R. Within 30 days of the date of the invoice.

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…

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Annex C
Consumer Redress Schemes sourcebook (CONRED) In this Annex, all of the text is new and is not underlined. Insert the following new chapter, CONRED 4 (British Steel Consumer Redress Scheme), after CONRED 3 (British Steel Pension Scheme Financial Resilience Requirements). 4 British Steel Consumer Redress Scheme
4.1 Application and subject matter of the scheme
Definitions used in this chapter
4.1.1 R (1) ‘BSPS’ means the Old British Steel Pension Scheme, which entered a
PPF assessment period on 29 March 2018;
(2) ‘BSPS2’ means the British Steel Pension Scheme in its new format, following the agreement of the Regulated Apportionment Arrangement with Tata Steel UK Limited and the Time to Choose exercise in 2017 under which the BSPS was separated from its sponsor; (3) ‘BSPS calculator’ is the calculator used to complete Step 3 of the pension transfer redress calculation in DISP App 4.3.19R; (4) ‘BSPS DBAAT’ means the British Steel Pension Scheme Defined Benefit Advice Assessment Tool in the form of an Excel spreadsheet at CONRED 4 Annex 20R; (5) ‘BSPS pension transfer’ means a pension transfer of the consumer’s BSPS pension arrangement; (6) ‘calculation date’ has the same meaning as in DISP App 4.1.1R(6); (7) ‘causation question’ is whether the firm’s failure to comply with the suitability requirements is the effective cause of the consumer’s loss; (8) ‘comparator scheme’ means, other than as provided by CONRED 4
Annex 21 13.1R(4):
(a) if the advice was given in the period on or before 16 May 2017, BSPS; (b) if the advice was given in the period from 17 May 2017 to 11 October 2017, either or both of BSPS and PPF; and (c) if the advice was given in the period on or after 12 October 2017, BSPS2 and PPF;

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(9) ‘DC pension arrangement’ means any pension arrangement holding the value of the consumer’s pension benefits which originated from the BSPS, including where the arrangement has been subsequently switched to a new arrangement; (10) ‘DOL’ means the date that the consumer left active service in the BSPS; (11) ‘FCA DBAAT’ means the FCA Defined Benefit Advice Assessment Tool. [Editor’s note: the FCA DBAAT is available at https://www.fca.org.uk/firms/defined-benefit-pension-transfers] (12) ‘material information gap’ means where there is a failure to collect the necessary information so that the firm cannot complete an Information Area in the Information Section of the BSPS DBAAT and, as a result, it is not possible to assess the suitability of the advice; (13) ‘pension benefits’ are the benefits available to a consumer in the named defined benefit occupational pension scheme(s) and may include income and lump sum benefits, payable to either a consumer, their spouse or dependents, which could commence at specified times; (14) ‘PPF’ means the Pension Protection Fund; (15) ‘redress offer’ has the same meaning as in DISP App 4.1.1R(18); (16) ‘relevant period’ means the period commencing on 26 May 2016 and ending on 29 March 2018; (17) ‘scheme case’ is a case falling within the subject matter of the scheme that satisfies each of the conditions in CONRED 4.2.2R, as modified by CONRED 4.2.3R; (18) ‘scheme effective date’ means 28 February 2023 and is the date that the consumer redress scheme created by this chapter comes into force; (19) ‘secondary compensation sum’ has the same meaning as in DISP App 4.1.1R(20); (20) ‘suitability requirements’ means the requirements specified in paragraph 7.1R of CONRED 4 Annex 21R and are:
(a) the requirements in COBS 9.2.1R(1); and

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(b) the common law duty in contract or tort to exercise reasonable skill and care in advising the consumer on pension transfers, and that were in force during the relevant period and applicable to a scheme case; (21) ‘two-adviser model’ means an arrangement where one firm provides the advice on pension transfers and a different firm provides the advice on the proposed arrangement.
4.1.2 G Certain words and phrases specific to CONRED have the meaning set out in
the Glossary. All words in italics are defined in the Glossary.
Application to firms which gave advice about a pension transfer
4.1.3 R This chapter applies to a firm which gave advice to a consumer in relation to
a BSPS pension transfer, after which a consumer made such a pension transfer, and to which advice the suitability requirements applied.
4.1.4 G This chapter applies:
(1) regardless of whether a firm advised a consumer to transfer their BSPS pension benefits to a pension scheme with flexible benefits or advised a consumer against such a course of action; and (2) to a firm even if a consumer to whom the advice was given instructed another firm to arrange the BSPS pension transfer. Application to persons who have assumed a firm’s liabilities
4.1.5 R (1) This chapter also applies to a person that has assumed a liability
(including a contingent one) in respect of a failure by a firm to whom this chapter applies. (2) A person in (1) must either:
(a) perform the obligations the firm is required to perform under this chapter; or (b) ensure that those obligations are performed by the firm, and must notify the FCA, by email to BSPSnotifications@fca.org.uk within 1 week of the scheme effective date, as to whether that person or the firm, or both, will be performing those obligations. (3) References in this chapter to a firm are to be interpreted as referring to a person in (1) where the context so requires. Wider application of certain provisions

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4.1.6 R (1) CONRED 4.3.10R and CONRED 4.4.22R also apply to a firm which
has carried out any of the following regulated activities for a consumer in relation to a BSPS pension transfer:
(a) advising on investments;
(b) arranging (bringing about) deals in investments; (c) making arrangements with a view to transactions in investments; or (d) managing investments. Duration of the scheme
4.1.7 R The consumer redress scheme created by this chapter comes into force on
the scheme effective date and has no end date.
Subject matter of the scheme
4.1.8 R The subject matter of the scheme is whether a firm complied with the
suitability requirements in scheme cases.
4.1.9 G Subject to CONRED 4.7.2R(4) and CONRED 4.7.3R(4), a scheme case may
cease to be within the subject matter of the scheme where any of CONRED 4.2.7R(1), CONRED 4.2.8R, CONRED 4.3.8R or CONRED 4.4.20R apply. Impact of complaints to the Financial Ombudsman Service on scheme deadlines
4.1.10 R Where a consumer makes a complaint to the Financial Ombudsman Service
following a redress determination by a firm under this chapter, the remaining time period for completing any subsequent scheme steps in, as applicable, CONRED 4.2.1R, CONRED 4.3.1R and CONRED 4.4.1R is suspended between:
(1) the date the letter from the firm communicating the redress determination is sent to the consumer; and (2) the date:
(a) the complaint is resolved by agreement between the firm and the consumer pursuant to DISP 3.5.1R; or (b) the firm receives notification from the Financial Ombudsman Service of the outcome of the complaint in accordance with DISP 3.6.6R(5). Summary of the scheme
4.1.11 G CONRED 4 Annex 18G contains a flow diagram of the consumer redress
scheme created by this chapter.

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4.2 Consumer redress scheme: identifying scheme cases
Deadline to complete the steps in this section
4.2.1 R No more than 1 month after the scheme effective date, a firm must take the
first and second steps set out in this section. The deadline for the third step is set out at CONRED 4.2.8R. First step: identify scheme cases
4.2.2 R The first step is for a firm to identify all scheme cases. A scheme case is a
case that satisfies each of the following conditions:
(1) a firm gave a consumer advice in relation to a BSPS pension transfer during the relevant period; (2) the advice in (1) was to transfer their BSPS pension benefits; (3) the suitability requirements applied to the advice in (1); (4) the consumer subsequently transferred their BSPS pension benefits; (5) the consumer had not, prior to the scheme effective date, accepted an offer of redress from the firm or other person in full and final settlement of all potential claims arising out of the advice in (1); (6) the consumer had not, prior to the scheme effective date, asked the Financial Ombudsman Service to deal with a complaint against the firm arising out of the advice in (1); (7) the advice in (1) was not reviewed in a past business review carried out by a skilled person where the firm had assessed the firm’s advice using the FCA DBAAT and notified the consumer of the following:
(a) the outcome of that review (whether in the firm’s view the advice met the suitability requirements); and (b) that the consumer is entitled to complain to the Financial Ombudsman Service if they disagree with the firm’s assessment; (8) the law applicable to the obligations of the firm arising in connection with the advice in (1) is that of a UK territory (that is, England and Wales, Scotland or Northern Ireland) (see CONRED 4.2.5R); and (9) if the applicable law in (8) is that of England and Wales or Northern Ireland:
(a) the consumer’s BSPS pension transfer was on or after 24 November 2016; or

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(b) the consumer did not know, and could not have reasonably been expected to know, before 24 November 2019 that they had cause for a claim; or (10) if the applicable law in (8) is that of Scotland:
(a) the consumer’s BSPS pension transfer was on or after 24 November 2017; or (b) the consumer did not know, and could not have reasonably been expected to know, before 24 November 2017 that they had cause for a claim.
4.2.3 R The condition in CONRED 4.2.2R(6) does not apply if a firm is declared in
default.
Guidance on excluded scheme cases
4.2.4 G CONRED 4.2.2R(1) does not include a case where the firm advised the
client not to transfer their BSPS pension benefits, or to remain in the BSPS, and where the firm or a different firm subsequently arranged the pension transfer. Applicable law
4.2.5 R For the purposes of CONRED 4.2.2R(8), the applicable law is:
(1) that of the UK territory where, in connection with the advice:
(a) the consumer has agreed to the firm’s terms of business; and (b) these include a clause providing for the application of the law of a particular UK territory (that is, England and Wales, Scotland or Northern Ireland); or (2) (if (1) does not apply) that of the UK territory where the firm and the consumer both habitually reside and where the advice is given; or (3) (if neither (1) nor (2) apply) that of the UK territory in which the consumer is habitually resident, provided the conditions in CONRED 4.2.6R(1) to (2) are satisfied; or (4) (if neither (1), (2) nor (3) apply) that of the UK territory in which the firm gave the advice.
4.2.6 R The conditions referred to in CONRED 4.2.5R(3) are that:
(1) in the UK territory in which the consumer has their habitual residence, either:
(a) the contract under which the advice was provided was preceded by a specific invitation addressed to the consumer,

FCA 2022/43 or by advertising, and the consumer took all the steps necessary to engage the firm; or (b) the firm or its agent received the consumer’s order; or (2) the advice was provided at least in part in that UK territory. Second step: send letters to consumers
4.2.7 R The second step is for a firm:
(1) in relation to cases which do not meet any one of the conditions in CONRED 4.2.2R(1) to (10) (subject to CONRED 4.2.3R) (nonscheme cases), to send to the consumer a redress determination in the form set out in CONRED 4 Annex 1R; (2) in relation to all scheme cases, to send to the consumer a letter in the form set out in CONRED 4 Annex 2R. Third step: acknowledge opt-outs
4.2.8 R Where a consumer has responded to a letter sent by a firm in accordance
with CONRED 4.2.7R(2) stating that they do not wish to have their case considered under this consumer redress scheme, the firm must, within 5 business days of receiving the response, send the consumer a redress determination in the form set out in CONRED 4 Annex 3R.
4.2.9 R The effect of a consumer stating that they do not wish to have their case
considered under this scheme and opting out of it is that the scheme case no longer falls within the subject matter of the consumer redress scheme created by this chapter.
4.2.10 G After any opt-out, a firm should handle any complaint from a consumer in
relation to advice about a BSPS pension transfer other than in respect of a redress determination in accordance with the complaint handling rules in DISP.
4.3 Consumer redress scheme: case review
Deadline to complete the steps in this section
4.3.1 R No later than 7 months from the scheme effective date, a firm must take the
steps set out in this section.
First step: case review
4.3.2 R (1) The first step is for a firm to carry out a review of each scheme case
(‘a case review’).
(2) A case review must be carried out by:

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(a) completing the BSPS DBAAT at CONRED 4 Annex 20R, in accordance with the instructions set out in CONRED 4 Annex 21R; or (b) using a FCA DBAAT that was completed by the firm prior to the scheme effective date. (3) Where a BSPS DBAAT is used:
(a) it must be accompanied by an attestation in the form specified in the BSPS DBAAT; and (b) the attestation in (a) must be made by an individual approved to perform the SMF16 (Compliance oversight) FCA controlled function for the firm or by an individual approved to perform another appropriate senior management function within the firm. (4) If a FCA DBAAT is used to carry out a case review:
(a) it must be accompanied by an attestation in the form specified in CONRED 4 Annex 19R; and (b) the attestation in (a) must be made by an individual approved to perform the SMF16 (Compliance oversight) FCA controlled function for the firm or by an individual approved to perform another appropriate senior management function within the firm in accordance with the instructions set out at CONRED 4 Annex 21R 12.2 and 12.3.
4.3.3 E Non-compliance with any of the evidential provisions set out in the
instructions at CONRED 4 Annex 21R may be relied upon as tending to establish contravention of CONRED 4.3.2R.
4.3.4 G In complying with CONRED 4.3.2R, a firm should have regard to the
guidance set out in the instructions at CONRED 4 Annex 21R.
Second step: cases of insufficient information
4.3.5 R (1) The second step applies only in respect of a scheme case where a firm
has attempted to comply with the first step (case review) but does not have sufficient information to determine:
(a) whether it has failed to comply with any of the suitability requirements; (b) the causation question; or (c) both (a) and (b). (2) To complete the second step, a firm must take the following actions:

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(a) within 5 business days of determining that a scheme case falls within (1), send a letter in the form set out in CONRED 4 Annex 4R to the consumer including, where necessary, a request that the consumer completes a letter of authority to authorise the firm to obtain further information on their behalf; (b) within 5 business days of receiving any completed letter of authority from the consumer or at the same time as sending the letter in (a) if the firm already has such authority, send a letter requesting the information in CONRED 4 Annex 4R to one of the following and allow at least 2 weeks to respond:
(i) in a scheme case involving a two-adviser model, the firm which provided the advice on the proposed arrangement; or (ii) in all other cases, any other firm that was involved in the BSPS pension transfer; (c) if no reply is received by the firm within 2 weeks of a letter in (a) being sent:
(i) within 5 business days of the 2 weeks expiring, send a further letter to the consumer in the form set out in CONRED 4 Annex 5R and allow the consumer at least 2 weeks to respond; and (ii) within 5 business days of receiving the completed letter of authority from the consumer, where relevant, send a letter to the firms in (b)(i) or (ii) requesting the necessary information and allow the firms at least 2 weeks to respond; (d) if no reply is received by a firm within 2 weeks of a letter in (b) or (c)(ii) being sent, within 5 business days of the 2 weeks expiring, send a further letter to the applicable firms requesting the necessary information and allow the firms at least 2 weeks to respond; (e) if no reply is received by a firm to the letters in (c)(i) or (d), take all reasonable steps to contact the consumer or, where applicable, any other firm by other means; and (f) if a reply is received from the consumer or a firm to whom a letter was sent in accordance with this rule but that reply contains insufficient information to determine the matters in (1), the firm must take all reasonable steps to obtain further information from the consumer or, where applicable, any other firm in (b).

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4.3.6 R A firm which, having carried out the second step, has acquired sufficient
information to determine the matters in CONRED 4.3.5R(1) must proceed to complete the first step (case review) in accordance with CONRED 4.3.2R.
4.3.7 R A firm may determine a scheme case no longer falls within the subject
matter of the consumer redress scheme created by this chapter if the firm:
(1) has carried out the second step in relation to a scheme case; and (2) still does not have sufficient information to complete the first step.
4.3.8 R Where CONRED 4.3.7R applies, a firm must:
(1) rate the case ‘non-compliant – material information gap’ in the BSPS DBAAT or ‘not-compliant-unclear’ in the FCA DBAAT (as appropriate); (2) complete the attestation in CONRED 4.3.2R(3) or (4) (as appropriate); and (3) promptly send the consumer a redress determination in the form set out in CONRED 4 Annex 6R.
4.3.9 G Where a firm has sent a consumer a redress determination pursuant to
CONRED 4.3.8R(3), the firm should handle any subsequent complaint from a consumer in relation to advice about a BSPS pension transfer other than in respect of a redress determination in accordance with the complaint handling rules in DISP. Obligation on firms connected with transfer advice
4.3.10 R A firm receiving a request for information pursuant to CONRED
4.3.5R(2)(b), CONRED 4.3.5R (2)(c)(ii) or CONRED 4.3.5R(2)(d) must take all reasonable steps to locate and provide the information requested within any reasonable time periods requested and, in any case, no later than 4 weeks after receiving the request. Obligation to notify FCA of any failures to elicit response
4.3.11 R A firm that has sent a further letter to another firm in accordance with
CONRED 4.3.5R(2)(d) and has not received a response to that letter within 4 weeks must notify the FCA of this failure at BSPSnotifications@fca.org.uk promptly and, in any case, within 5 business days of the 4 weeks elapsing. General guidance on second step
4.3.12 G Scheme cases to which the second step (in CONRED 4.3.5R (cases of
insufficient information)) applies are likely to be exceptional, having regard to the record-keeping requirements applicable to authorised persons under FCA rules (notably COBS 9.5, which requires firms to retain records relating

FCA 2022/43 to the suitability of pension transfers indefinitely and record keeping requirements in SYSC).
4.3.13 G (1) A firm should not refuse to consider a scheme case if there is
sufficient information to conclude that it was likely that the advice did not comply with the suitability requirements (but there is insufficient information to conclude that the advice complied with the suitability requirements). (2) A firm that has sufficient information to assess whether it complied with the suitability requirements should not refuse to answer the causation question unless there are reasonable grounds for requiring further information from the consumer to identify what they would have done if the advice met the suitability requirements. Third step: case review letters to consumers
4.3.14 R (1) Where a firm concludes that the advice provided to a consumer did
not comply with the suitability requirements and has answered ‘yes’ to the causation question in the BSPS DBAAT or FCA DBAAT, it must:
(a) send the consumer a letter in the form set out in CONRED 4
Annex 7R; and
(b) send the consumer a letter in the form set out in CONRED 4
Annex 10R, including:
(i) a list of any of the information set out in paragraph 13.30R of CONRED 4 Annex 21R which is required to complete the redress calculation using the BSPS calculator and which the firm does not already have; (ii) if the consumer has not already provided the firm with authority to enable the firm to collect information from third parties on the consumer’s behalf, a request that the consumer provide such authority; (iii) a request that the consumer respond to the firm to:
(A) confirm whether they require the firm to calculate the redress sum that would be payable by full or partial augmentation; (B) where the consumer requires the firm to calculate the redress sum at (A), provide any information set out at (2) which the firm does not already have; (C) confirm whether they wish to claim as part of a secondary compensation sum any other

FCA 2022/43 consequential losses as described in CONRED 4 Annex 10R; and (D) where the consumer does wish to claim an amount described in (C), provide the necessary information as set out in CONRED 4 Annex 10R; (c) where a firm already has authority from the consumer, at the same time as sending the letter in (b), as necessary, send one or more letters requesting the information in (b)(i) to:
(i) in a scheme case involving a two-adviser model, the firm which provided the advice on the proposed arrangement; (ii) any other firm that was involved in the BSPS pension transfer or which may hold relevant information (including the provider of the consumer’s DC pension arrangement and defined benefit occupational pension scheme); and (iii) HMRC and DWP; and (d) where a firm does not have authority at the time of sending the letter at (b) but subsequently receives a letter of authority, send an information request to any of the applicable parties as required by (c)(i) to (iii) within 5 business days of receipt of the letter of authority. (2) The information to calculate the redress sum that would be payable by full or partial augmentation is:
(a) the consumer’s relevant earnings in the current tax year; (b) the value of all pension contributions already made in the current tax year; (c) whether the redress payment would result in the consumer’s unused annual allowance in the current and previous 3 tax years being exceeded; (d) the expected value of all pensions held by the consumer up to the age of 75; (e) any lifetime allowance protections secured by the consumer; (f) any applicable lifetime allowance protection enhancement factors; (g) any benefit crystallisation events; and

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(h) whether the consumer’s money purchase annual allowance has been triggered. (3) Where a firm concludes that the advice provided to a consumer did not comply with the suitability requirements, but has answered ‘no’ to the causation question in the BSPS DBAAT or FCA DBAAT, the firm must send the consumer a redress determination in the form set out in CONRED 4 Annex 8R. (4) Where a firm concludes that the advice provided to a consumer complied with the suitability requirements, it must:
(a) send the consumer a redress determination in the form set out in CONRED 4 Annex 9R; and (b) take the steps in CONRED 4.3.15R to notify the FCA. Suitable redress determinations: notification to the FCA
4.3.15 R (1) Where a firm concludes that its advice to a consumer was suitable, it
must notify the FCA of the following information:
(a) the outcome of the firm’s redress determination; and (b) the consumer’s name, address, telephone number(s) and, where available, email address. (2) A firm must comply with the requirement in (1) to notify the FCA in the next progress report required under CONRED 4.8.2R(2), which is due following the ‘opt-out deadline’ in (3). (3) The opt-out deadline is the date which falls 2 weeks after the date when the redress determination required by CONRED 4.3.14R(4)(a) is sent by the firm to the consumer. (4) The requirement in (1) does not apply if the consumer has informed the firm in writing that they do not wish for their details to be passed to the FCA.
4.4 Consumer redress scheme: calculating and paying redress
Deadlines to complete the steps in this section
4.4.1 R (1) A firm must make a redress determination pursuant to CONRED
4.4.2R or CONRED 4.4.20R where it has determined that the advice provided to the consumer did not comply with the suitability requirements and has answered ‘yes’ to the causation question. Subject to (2), the firm must:
(a) not take the first step of calculating and sending the redress determination pursuant to CONRED 4.4.2R until after 1 April 2023; and

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(b) make such redress determination no later than 10 months from the scheme effective date. (2) The deadline to make the redress determination referred to in (1)(b) is extended to 12 months from the scheme effective date where a consumer has:
(a) requested that the firm calculate the redress sum that would be payable by full or partial augmentation; or (b) claimed for an amount described at CONRED 4.3.14R(1)(b)(iii)(C). First step: calculate redress and send redress determination
4.4.2 R The first step is for a firm to calculate the amount of redress owed to a
consumer:
(1) in accordance with the relevant rules and guidance set out in DISP App 4 and DISP App 4 Annex 1, as modified by CONRED 4; (2) by completing the BSPS calculator in accordance with the instructions set out in CONRED 4 Annex 21R; (3) where requested by a consumer, by calculating the redress sum that would be payable by full or partial augmentation outside of the BSPS calculator in accordance with (1); and send the consumer a redress determination in the form of the letter set out in CONRED 4 Annex 13R.
4.4.3 R A firm must comply with DISP App 4 when carrying out the redress
calculation, as modified by this section:
Table: application of DISP App 4 rules
DISP App 4 provisions
Application / modification
Step 1 at DISP App
4.3.3R to DISP App
4.3.14G
Does not apply. A firm must instead follow the steps to obtain information in CONRED 4. Step 2 at DISP App 4.3.15R to DISP App 4.3.18G Apply with the following modification: any reference to defined benefit occupational pension scheme is to be replaced with a reference to the appropriate comparator scheme identified in CONRED Annex 21R 13.21R to CONRED Annex 21R 13.26R.

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Step 3 at DISP App
4.3.19R to DISP App
4.3.26R.
Applies in full. A firm must use the BSPS calculator to complete Step 3. Step 4 at DISP App 4.3.27R to DISP App 4.3.35G Applies in part. A firm must use the BSPS calculator to complete DISP App 4.3.27R to 4.3.29R as described in CONRED Annex 21R to determine the redress components of a cash lump sum. Step 5 at DISP App 4.3.36R to 4.3.40G Applies in part. A firm completes Step 5 by sending out the redress determination at CONRED 4 Annex 13R in accordance with the instructions at CONRED 4.4.5R.
4.4.4 E Non-compliance with any of the evidential provisions set out in the
instructions for the redress calculation at CONRED 4 Annex 21R may be relied upon as tending to establish contravention of CONRED 4.4.2R.
4.4.5 R A redress determination in the form of the letter set out in CONRED 4
Annex 13R must include the following:
(1) a copy of a summary report from the BSPS calculator as well as an offer to provide a detailed calculation report from the BSPS calculator if requested by the consumer; (2) the information at DISP App 4.3.38R to DISP 4.3.39R; and (3) where the firm has reached an arrangement with the consumer as described at CONRED 4.4.9R(1)(b), a comprehensive summary of the instalments agreed.
4.4.6 R When a firm communicates a redress offer to a consumer, it should:
(1) take reasonable steps to communicate in a way that is fair, clear and not misleading; (2) take into account the information needs of the consumer, including their understanding of financial services; and (3) where possible, use plain language and avoid the use of jargon, unfamiliar or technical language.
4.4.7 R Where a consumer requests a copy of the detailed calculation report from the
BSPS calculator, a firm must send a letter enclosing such report in the form of the letter set out in CONRED 4 Annex 14R within 5 business days of receiving such request.

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4.4.8 R Where a firm determines that redress is payable to a consumer and the firm
has not received a claim from the consumer within 4 weeks of a redress determination being sent pursuant to CONRED 4.4.2R, the firm must:
(1) within 5 business days, send a further letter to the consumer in the form set out in CONRED 4 Annex 16R; and (2) if there is no response to the redress determination in CONRED 4.4.2R within 3 months, send a letter to the consumer in the form set out in CONRED 4 Annex 17R within 5 business days of the 3 months expiring.
4.4.9 R Unless CONRED 4.4.10R applies, a firm must pay the redress determined
payable to a consumer:
(1) either:
(a) within 28 days of receiving a claim from the consumer for the redress determined to be payable; or (b) as agreed with the consumer pursuant to any arrangement providing for the payment of redress in instalments over one or more tax years pursuant to DISP App 4.4.31G(4)(c); (2) in accordance with the instructions set out by the consumer in their response to the redress determination in which they make their claim; (3) including an additional compensation sum which:
(a) is payable to provide redress for the period between the valuation date referred to in CONRED 4 Annex 21 13.1R(16) and the payment date; and (b) must be calculated using the BSPS calculator in accordance with DISP App 4.3.29(3); and (4) accompanied by a confirmation in the form of the letter set out in CONRED 4 Annex 15R including, where appropriate, a comprehensive summary of any arrangement with the consumer as described at CONRED 4.4.9R(1)(b).
4.4.10 R A firm does not need to pay redress or otherwise comply with the
requirements in CONRED 4.4.9R where the consumer did not send a claim for it within 3 months of the date of the redress determination in CONRED 4.4.2R, unless the firm is required to extend the validity of the redress calculation in accordance with DISP App 4.3.25R.
4.4.11 R (1) A firm must complete the steps at (2) where a consumer makes a
complaint to the Financial Ombudsman Service in respect of a redress determination made under CONRED 4.4.2R and either of the following apply:

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(a) the firm and the consumer agree pursuant to DISP 3.5.1R that the redress determination was correct; or (b) the firm receives notification from the Financial Ombudsman Service in accordance with DISP 3.6.6R(5) upholding the redress determination. (2) Within 2 weeks of the date where either the firm and the consumer reach agreement under (1)(a) or the firm receives the notification under (1)(b), the firm must:
(a) recalculate the amount of redress owed to the consumer pursuant to CONRED 4.2.2R in accordance with CONRED 4
Annex 21 13.15R(2); and
(b) make a further redress determination pursuant to CONRED 4.2.2R in the form of the letter set out in CONRED 4 Annex 13R with an adaptation to the letter to explain the circumstances in which the further redress determination is being made.
4.4.12 R After the expiry of the 28-day period in CONRED 4.4.9R(1)(a) or in the case
of an arrangement referred to at CONRED 4.4.9R(1)(b) after the expiry of the payment period for each instalment, the redress may be recovered as a debt due to the consumer and, in particular, may:
(1) if a county court so orders in England and Wales, be recovered by execution issued from the county court (or otherwise) as if it were payable under an order of that court; or (2) be enforced in Northern Ireland as a money judgment under the Judgments Enforcement (Northern Ireland) Order 1981; or (3) be enforced in Scotland as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland. [Note: This rule is imposed by the FCA using the powers granted to it under
section 404A(1)(m) of the Act to make rules providing for the enforcement
of any redress under a consumer redress scheme.]
Second step: cases of insufficient information
4.4.13 R The second step applies in respect of a scheme case where:
(1) a firm has not received a response:
(a) from a consumer (‘C’) to a letter sent in accordance with CONRED 4.3.14R(1)(b) within 2 weeks of the letter being sent; or

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(b) from another party to a letter sent in accordance with CONRED 4.3.14R(1)(c) or (d) within 2 weeks of the letter being sent; or (2) a consumer requests that the firm calculate the redress sum that would be payable by full or partial augmentation.
4.4.14 R To complete the second step, a firm must take the following actions:
(1) Where CONRED 4.4.13R(1) applies within 5 business days of:
(a) the 2 weeks in CONRED 4.4.13R(1)(a) expiring, send a further letter in the form set out in CONRED 4 Annex 11R to the consumer and allow the consumer at least 2 weeks to respond; and (b) the 2 weeks in CONRED 4.4.13R(1)(b) expiring, send a further letter to the parties in CONRED 4.3.14R(1)(c) requesting the applicable information and allow the parties at least 2 weeks to respond. (2) Where CONRED 4.4.13R(2) applies, within 5 business days of receiving a request from a consumer to calculate the redress sum that would be payable by full or partial augmentation:
(a) send a letter to the applicable parties in CONRED 4.3.14R(1)(c) requesting the information at CONRED 4.3.14R(2) and allow at least 2 weeks to respond; and (b) if no reply is received to the letter at (a), send a further letter to the applicable parties within 5 business days of the expiry of the applicable deadline at (a) with a further reminder to provide the applicable information and allow at least 2 weeks to respond. (3) If a reply is received from the consumer or the parties specified in CONRED 4.3.14R(1)(c) in respect of any information request in connection with the calculation of redress but the information it contains is insufficient to calculate redress in accordance with CONRED 4.4.2R, the firm should take all reasonable steps to obtain further information from the consumer or, where applicable, any other parties in CONRED 4.3.14R(1)(c).
4.4.15 R A firm which, having carried out the second step, has sufficient information
to complete the redress calculation using the BSPS calculator and, where requested by the consumer, the redress sum that would be payable by full or partial augmentation, must then complete the first step in accordance with CONRED 4.4.2R.
4.4.16 G Paragraph 13.30R of CONRED 4 Annex 21R specifies the information
required to complete the redress calculation using the BSPS calculator.

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4.4.17 R Where a consumer has requested a firm calculate the redress sum that would
be payable by full or partial augmentation or an amount described at CONRED 4.3.14R(1)(b)(iii)(C), but the firm does not have sufficient information to make such calculations having taken the applicable steps at CONRED 4.4.13R, the firm must proceed to calculate only the redress calculation using the BSPS calculator in accordance with CONRED 4.4.2R (excluding any amount claimed as described at CONRED 4.3.14R(1)(b)(iii)(C)).
4.4.18 R A firm may determine a scheme case no longer falls within the subject
matter of the consumer redress scheme created by this chapter if the firm:
(1) has taken all reasonable steps to obtain further information from the consumer and the parties specified in CONRED 4.3.14R(1)(c); and (2) does not have sufficient information to calculate redress using the BSPS calculator.
4.4.19 R A firm must not make a determination pursuant to CONRED 4.4.18R only
because, following a request from a consumer, it does not have sufficient information to calculate either or both the redress sum that would be payable by full or partial augmentation or any amount described at CONRED 4.3.14R(1)(b)(iii)(C).
4.4.20 R A firm must promptly send a consumer a redress determination in the form
set out in CONRED 4 Annex 12R if it determines, in accordance with CONRED 4.4.18R, that the scheme case no longer falls within the subject matter of the consumer redress scheme created by this chapter.
4.4.21 G Where a firm has sent a consumer a redress determination pursuant to
CONRED 4.4.20R, the firm should handle any subsequent complaint from the consumer in relation to advice about a BSPS pension transfer other than in respect of a redress determination in accordance with the complaint handling rules in DISP and, where possible, calculate redress using the BSPS calculator. Obligation on firms connected with transfer advice
4.4.22 R A firm receiving a request for information pursuant to CONRED 4.3.14R or
CONRED 4.4.14R must take all reasonable steps to locate and provide the information requested within any reasonable time periods requested and, in any case, no later than 4 weeks after receiving the request. Obligation to notify FCA of any failures to elicit response
4.4.23 R A firm that has sent a reminder to an initial information request to another
firm in accordance with CONRED 4.4.14R and has not received a response to that letter within 4 weeks of it being sent, must notify the FCA of this failure at BSPSnotifications@fca.org.uk within 5 business days of the 4 weeks elapsing.

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4.5 Taking steps by or on behalf of FCA
4.5.1 G (1) If the conditions in (2) are satisfied, the FCA may:
(a) instead of the firm, take any of the steps at CONRED 4.2 to CONRED 4.4; or (b) appoint one or more competent persons to take any of the steps at CONRED 4.2 to CONRED 4.4. (2) The conditions are:
(a) there has been a material failure by the firm to take any of the actions required under this chapter; or (b) the firm has informed the FCA that it is unable or unwilling to take any of the actions required under this chapter because:
(i) to do so would be in breach of a condition of the firm’s professional indemnity insurance policy; and (ii) the firm’s insurer has not elected to take such actions on its behalf. (3) The FCA must give a firm prior notice before taking any of the steps under this rule.
4.5.2 R If the FCA gives notice in the circumstances described in CONRED 4.5.1R,
the firm must:
(1) not carry out (or, as the case may be, continue to carry out) any of the steps to be taken by the FCA or the competent person, unless so directed in writing by the FCA or competent person (as applicable); and (2) render all reasonable assistance to the FCA or competent person (but any assistance, the rendering of which would invalidate the firm’s professional indemnity insurance policy, is not reasonable for the purposes of this rule).
4.5.3 G A firm is expected to make reasonable efforts to obtain the consent of its
professional indemnity insurer to take the relevant steps in relation to this redress scheme, in line with its obligations under Principle 11 (Relations with regulators).
4.5.4 G Where permitted under the firm’s professional indemnity insurance policy, a
firm’s insurer can take any of the steps at CONRED 4.2 to CONRED 4.4 acting on the firm’s behalf.

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4.5.5 R (1) If, where the FCA or a competent person takes any steps in
accordance with CONRED 4.5.1R, the FCA proposes to make a determination of:
(a) whether a failure by a firm has caused loss to a consumer; and (b) what the provisional redress sum should be in respect of any failure, the FCA must give the firm a warning notice that specifies the proposed determination. (2) The provisional redress sum in (1) must be the amount that would be owed to a consumer if a redress determination were made pursuant to CONRED 4.4.2R on the same date as the warning notice.
4.5.6 G (1) If the FCA decides to make a determination of the matters in
CONRED 4.5.5R, the FCA must give a firm a decision notice specifying the determination. (2) If the FCA decides to make such a determination, a firm may refer the matter to the Tribunal.
4.5.7 G Part XXVI of the Act (including the provisions as to final notices) applies in
respect of notices given under CONRED 4.5.5R and CONRED 4.5.6R.
4.5.8 G Where, instead of a firm, the FCA or, where applicable, a competent person:
(1) communicates with a consumer:
(a) they will do so in their own name, making clear in the case of a competent person its authority from the FCA to do so; and (b) they may make such amendments to the letters in the forms set out in the Annexes in CONRED 4 as are appropriate to reflect that they are being sent in the name of the FCA or competent person; or (2) makes the redress determination in the letter at CONRED 4 Annex 13R, the FCA or competent person will:
(a) update the provisional redress sum no later than 14 days after the issue of a final notice in respect of the FCA’s decision to make a determination of the matters in CONRED 4.5.5(1)R to reflect the amount that is owed at the time such redress determination is made; and (b) send the firm a copy of the consumer’s response to the redress determination.

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4.5.9 G A fee is payable by the firm (or person falling within CONRED 4.1.5(1)R in
any case where the FCA exercises its powers under CONRED 4.5.1R: see the table at FEES 3.2.7R.
4.5.10 G The completion of steps in CONRED 4.2 to CONRED 4.4 by, or on behalf
of, the FCA does not affect the ability of the Financial Ombudsman Service to consider a complaint, in particular where the firm has not sent a redress determination in accordance with the time limits specified under the consumer redress scheme created by this chapter.
4.6 Supervision and delegation of scheme process by firms
4.6.1 R A firm must ensure that the steps required by this chapter are undertaken or
supervised by:
(1) where DISP 1.3.7R applies, the individual appointed by the firm; or (2) a person of appropriate seniority in all other cases
4.6.2 G (1) A firm intending to outsource any of the obligations imposed on it
under this chapter should have due regard to the rules and guidance on outsourcing which are applicable to it, notably in SYSC. (2) A firm which outsources any of the obligations imposed on it under this chapter in respect of communications with consumers should ensure that those communications are clear as to the identity of the firm.
4.7 Provisions relating to communications with consumers
4.7.1 R Whenever a firm is required by a provision of this chapter to send a letter in
a form set out in a specified Annex in CONRED 4, it must:
(1) do so enclosing any relevant documents or pre-paid envelopes which the firm is instructed to enclose in the Annex with that letter; (2) where the letter is a redress determination, enclose the Financial Ombudsman Service leaflet and bespoke referral form in respect of such determination; (3) complete the letter by following the instructions in the standard form set out in the specified Annex; and (4) comply with any instructions in the specified Annex to insert, delete, select or complete text.
4.7.2 R All letters to consumers required under this chapter must be printed on the
letterhead of the firm and dispatched by recorded delivery mail. (1) Where a firm becomes aware that the contact details it holds for a consumer are out of date, it must take all reasonable steps to obtain

FCA 2022/43 up-to-date contact details and, where appropriate, resend any letter and repeat the steps to contact the consumer, required by this chapter. (2) If, having complied with (1), a firm is unable to contact a consumer, it need not take any further action pursuant to this chapter in relation to that consumer unless (3) applies. (3) If, in reliance on (2), the firm has ceased taking action but subsequently becomes aware of up-to-date contact details for that consumer within 12 months of the scheme effective date, the firm must, where appropriate, resend any letter and repeat the steps to contact the consumer required by this chapter. (4) Where a firm is required in (1) and (3) to resend any letter and repeat the steps to contact the consumer, required by this chapter:
(a) it must do so even where it has made a redress determination pursuant to CONRED 4.3.8R or CONRED 4.4.20R; and (b) such redress determination is void. (5) Where a firm is resending a letter and repeating steps pursuant to (3), each applicable deadline for those actions by the firm is extended according to the length of the delay incurred by the application of (2). Provisions relating to communications with other firms
4.7.3 R (1) Where a firm becomes aware that the contact details it holds for a
firm that it has tried to contact pursuant to CONRED 4.3.5R, CONRED 4.3.14R(c) and (d), or CONRED 4.4.14R (‘other firm’) are out of date, it must take all reasonable steps to obtain up-to-date contact details and, where appropriate, resend any letter and repeat the steps to contact the other firm as required by this chapter. (2) If, having complied with (1), a firm is unable to contact the other firm, it need not take any further action pursuant to this chapter in relation to that firm unless (3) applies. (3) If, in reliance on (2), the firm has ceased taking action but subsequently becomes aware of up-to-date contact details for that firm within 12 months of the scheme effective date, the firm must, where appropriate, resend any letter and repeat the steps to contact the firm required by this chapter. (4) Where a firm:
(a) has already made a redress determination pursuant to CONRED 4.3.8R or CONRED 4.4.20R; and (b) obtains further information from the other firm within 12 months of the scheme effective date which means that the firm has sufficient information to determine, as applicable, the

FCA 2022/43 matters in CONRED 4.3.5R(1) or to calculate redress using the BSPS calculator, such redress determination is void and the firm must take the remaining actions in relation to the relevant consumer’s case as if the redress determination had not been made. (5) Where a firm is resending a letter and repeating steps pursuant to (1) or (3), or where (4) applies, each applicable deadline for those actions by the firm is extended according to the length of the delay incurred by the application of (2). Guidance on taking reasonable steps to ascertain missing information
4.7.4 G For the purposes of CONRED 4.3.5R, CONRED 4.3.10R, CONRED 4.4.14R,
CONRED 4.4.22R, CONRED 4.7.2 and CONRED 4.7.3, ‘reasonable steps’ might include, as appropriate:
(1) checking public sources of information, but without incurring disproportionate cost; (2) attempting to contact the consumer by telephone (at a reasonable hour when the consumer is likely to be available to receive the call) and by email; and (3) attempting to contact any other party by telephone (during business hours) and by email.
4.7.5 R When taking reasonable steps to ascertain missing information and when
they contact a consumer a firm must:
(1) only make requests for information that are necessary for assessing compliance with the suitability requirements, the causation question or for the redress calculation using the BSPS calculator and which the consumer can reasonably be expected to provide; (2) exercise sensitivity when requesting information about a consumer’s personal circumstances; (3) ensure the consumer understands what information they have been asked to provide and in what format; (4) only ask for information that is likely to be readily accessible to the consumer (and obtain the consumer’s authority to approach third parties for information on their behalf); (5) allow the consumer at least 14 days to respond; and (6) make clear why the firm is asking for the information and the consequence if the information is not provided. Prohibition against influencing consumers against their interests

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4.7.6 R A firm must not make any communication to a consumer which seeks to
influence, for the benefit of the firm, the outcome of the steps taken in this
chapter, either by seeking to influence the content of information provided
by the consumer in response to the firm’s requests made under this chapter or otherwise. Deceased consumers
4.7.7 R Where a firm is required to contact a consumer under a provision of these
rules whom the firm knows to be or becomes aware is deceased, it must take all reasonable steps to instead communicate with:
(1) a personal representative of the consumer’s estate; or (2) a beneficiary or beneficiaries of their estate or pension.
4.7.8 R The provisions of CONRED 4.7.2R also apply in respect of a firm’s
communications with persons referred to in CONRED 4.7.7R.
4.8 Consumer redress scheme: information requirements
Requests for information by the FCA
4.8.1 R In relation to any matter concerning or related to the consumer redress
scheme created by this chapter, section 165 (FCA’s power to require information: authorised persons etc) of the Act and any provision of Part XI (Information Gathering and Investigations) of the Act which relates to that
section apply to any firm (or person in CONRED 4) which is not an
authorised person as if it were an authorised person.
Ongoing reporting requirements
4.8.2 R (1) By 1 month after the scheme effective date, a firm must send the FCA
an initial ‘progress report’ with the most up-to-date information held by the firm in the information categories in CONRED 4.8.3R. (2) A firm must submit a further progress report every 2 weeks, with the second progress report to be received by the FCA no later than 14 days after the date the initial report was provided to the FCA until the conditions in (3) apply. (3) The conditions are:
(a) there are no further steps which the firm is or could be required to take pursuant to this chapter in respect of any scheme case; and (b) the firm has notified the FCA by email to BSPSnotifications@fca.org.uk that the condition in (a) is satisfied and that it intends to stop submitting progress reports in accordance with (2).

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(4) By 6 weeks after the scheme effective date, the firm must send the FCA a ‘one-off report’ with the information held by the firm in the information categories in CONRED 4.8.4. (5) The reports required by (1), (2) and (4) must:
(a) contain an attestation by a senior manager responsible for compliance oversight of the firm confirming that:
(i) the information provided in each of the reports is complete; and (ii) where the information reflects a redress determination, that such a determination has been reached in accordance with any applicable rules; and (b) be submitted to the FCA:
(i) in the case of the reports at (1) and (2) using RegData; or (ii) in the case of the report at (4):
(A) using any electronic system which has been made available by the FCA for the purposes of submitting the report; or (B) if no such electronic system is available, by email to BSPSnotifications@fca.org.uk. (6) Where a firm agrees an arrangement with a consumer providing for the payment of redress in instalments over one or more tax years pursuant to DISP App 4.3.31G(4)(c), it must within 5 business days of reaching such an arrangement notify the FCA by email to BSPSnotifications@fca.org.uk.
4.8.3 R The progress reports required by CONRED 4.8.2R must contain the
following information about each scheme case:
(1) consumer identifier;
(2) the date the letter at CONRED 4 Annex 2R was sent; (3) whether the consumer receiving the letter in (2) has opted out of the scheme and the date a firm received notification from the consumer of their decision to opt-out; (4) where the firm has carried out the case review at CONRED 4.3.2R:
(a) the date the case review was completed;

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(b) a copy of the completed FCA or BSPS DBAAT; (c) whether the scheme case was rated suitable, unsuitable or ‘non-compliant due to a material information gap(s)’ or ‘notcompliant-unclear’ (in the case of the FCA DBAAT); (d) for scheme cases rated as unsuitable, the result of the causation assessment; (5) in a case where a firm has concluded that the advice was suitable:
(a) the date a firm sent the letter at CONRED 4 Annex 9R; (b) the consumer’s name, address, telephone number(s) and, where available, email address (in the BSPS DBAAT or, where using an FCA DBAAT, in the Reg Data report); (c) whether a firm is aware that the consumer has complained to the Financial Ombudsman Service about the determination communicated in (a); (d) the date a firm became aware of any complaint in (c); and (e) the outcome of the complaint (both suitability and causation as applicable) as notified to the firm by the Financial Ombudsman Service in accordance with DISP 3.6.6R(5); (6) in a case where a firm has concluded that the advice was unsuitable and answered ‘no’ to the causation question, the date a firm sent the letter at CONRED 4 Annex 8R; (7) in a case where a firm has concluded that the advice was unsuitable and answered ‘yes’ to the causation question the date a firm sent the letters at:
(a) CONRED Annex 7R; and
(b) CONRED Annex 10R;
(8) where a firm has completed the redress assessment as required by CONRED 4.4.2R, the following in respect of the latest offer of redress made pursuant to the consumer redress scheme created by this chapter; (a) the date on which the redress calculation was completed; (b) the redress amount rounded to the nearest pound sterling; (c) the date the letter at CONRED 4 Annex 13R was sent to the consumer;

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(d) a copy of the redress calculation from the BSPS calculator; (e) whether the consumer has accepted the offer of redress in (c); and (f) the date on which any redress was paid.
4.8.4 R The ‘one-off report’ required by CONRED 4.8.2R must contain the
following information:
(1) the number of cases in relation to which a firm has sent a consumer a letter pursuant to:
(a) CONRED 4 Annex 1R;
(b) CONRED 4 Annex 2R; and
(2) in respect of (1)(a), a breakdown of the reasons such cases were excluded from the scheme with reference to the relevant condition or conditions at CONRED 4.2.2R.
4.8.5 G The consumer identifier referred to at CONRED 4.8.3R(1) should:
(1) be a number unique to each consumer which starts with a firm’s FCA firm reference number; (2) not include the consumer’s name or other personal data; and (3) be the same consumer identifier used on the BSPS DBAAT.
4.8.6 R A firm must provide copies of the BSPS DBAAT, FCA DBAAT and the
redress calculation from the BSPS calculator in the format of a data string in the applicable RegData report.
4.8.7 G If the firm is to send an encrypted email to the FCA, it should use Egress
Switch encryption software.
[Editor’s note: instructions for Egress Switch are available at https://www.fca.org.uk/egress-switch]
4.9 Record-keeping requirements
4.9.1 R (1) A firm must keep the following records:
(a) evidence of posting for each letter sent in accordance with this
chapter;
(b) a copy of each letter sent in accordance with this chapter; (c) a record of any attempts to contact the consumer, contact any other relevant firm, or obtain further information, in

FCA 2022/43 accordance with CONRED 4.3.5R, CONRED 4.3.14R(1)(c) or (d) and CONRED 4.4.14R; (d) a copy of the Excel Spreadsheet containing the completed BSPS DBAAT or FCA DBAAT for each scheme case; (e) a record of the redress calculation performed by the BSPS calculator in Excel Spreadsheet format; and (f) all information on the consumer file and any information received from the consumer. (2) A firm must keep the records required by (1) for a minimum of 5 years from the date of their creation or (for the records in (1)(f)) the date when the information was included in the consumer file or obtained.

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4 Annex
1R
Redress determination: consumers outside scope/confirming exclusion [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Customer details] British Steel consumer redress scheme We will not review the advice we gave you about your British Steel Pension Scheme benefits Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We will not be reviewing the advice we gave you about your British Steel Pension Scheme (BSPS) benefits. We give our reasons for excluding you from the redress scheme below. If you are unhappy with our decision not to review your advice under the scheme, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:
 telephone on 0800 023 4567 or 0300 123 9123; or  email addressed to BSPS@financial-ombudsman.org.uk. The Financial Conduct Authority (FCA) has identified that many people were given poor advice to transfer out of the BSPS. The FCA has set up a redress scheme. This scheme means we must review the advice we gave to some customers to see if they could be entitled to a payment. We are not required to review the advice we gave to you for the following reason(s):
[You have already complained about our advice to you to transfer out of BSPS. We sent our response to you on [insert date of final response] and you accepted an offer in full and final settlement of your complaint.] AND/OR

FCA 2022/43
[You have already complained about our advice to you to transfer out of BSPS. We sent our response to you on [insert date of final response] and you subsequently referred your complaint to the Financial Ombudsman Service.] AND/OR [We advised you to remain in BSPS but you transferred out against our advice. This is known as an ‘insistent client’ transfer. If you disagree that you were an ‘insistent client’, you can contact the Financial Ombudsman Service.] AND/OR [The advice we gave you to transfer out of BSPS has already been assessed by an independent reviewer (known as a ‘Skilled Person’). Because that review has finished and we sent the result to you in our letter of [insert date], we are not required to take further action about the advice we gave you. If you have any questions about this, you can contact the FCA using the details below.] AND/OR [The scheme only covers advice that was given between 26 May 2016 and 29 March 2018. We advised you on [insert date of advice], so in our view your case is not covered by the scheme.] AND/OR [For England, Wales and Northern Ireland cases:] [The scheme only covers advice on pension transfers where the legal time limits for complaining about the advice had not expired on 24 November 2022 when the FCA made the scheme rules. There are two relevant time limits where the case is under the law of England and Wales or Northern Ireland:
1. The first is that the date of the transfer must be on or after [24 November 2016]. [If
relevant] As you transferred on [insert date of transfer], this time period has expired; and
2. The second is that the date you knew you had a cause for complaint must be on or
after [24 November 2019]. This depends on when you knew or ought to have reasonably known there might have been a problem with the advice we gave you. In our view, your case is not covered by the scheme because you should have known you had cause for complaint on [insert date]. We believe this because [insert rationale].] OR [For Scotland cases:] [The scheme only covers advice on pension transfers where the legal time limits for complaining about the advice had not expired on 24 November 2022 when the FCA made the scheme rules. There are two relevant time limits where the case is under the law of Scotland:
1. The first is that the date of the transfer must not be before [24 November 2017]. As
you transferred on [insert date of transfer], this time period has expired; and
2. The second is that the date you knew you had a cause for complaint must be on or
after [24 November 2017]. This depends on when you knew or ought to have reasonably known there might have been a problem with the advice we gave you. In our view, your case is not covered by the scheme because you should have known you had cause for complaint on [insert date]. We believe this because [insert rationale].] What you can do next

FCA 2022/43
If you are unhappy with our decision not to review the advice we gave you, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly in our decision to exclude you. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about our decision at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme. You can contact the Financial Ombudsman Service by:
 telephone: 0800 023 4567 or 0300 123 9123; or  email: BSPS@financial-ombudsman.org.uk. You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the FCA, you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. If you have any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. You should contact us directly if you have any other complaint about our services. Yours sincerely, <signature> <name of adviser or customer service> Enclosure:
Financial Ombudsman Service leaflet and bespoke referral form

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers out-of-scope of the assessment. Details in Italics to be pre-populated.

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme - Complaint to the Financial Ombudsman Service about Out-of-Scope Assessment I have received a letter from my firm saying they will not be reviewing the advice they provided on my British Steel Pension Scheme and they have excluded me from the s404 redress scheme. I am unhappy with that decision and would like it to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct; or The contact details are not correct and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post
There will be times FOS need to write to you, for example, to send you the outcome of your complaint. When FOS do, would you prefer an email or letter? Email Post

FCA 2022/43
Have you used FOS services before?
(This is so FOS can link records)
Yes No
Do you have any practical needs where we could help by making adjustments – like using large print, Braille or a different language? Please sign to confirm you wou ld like th e FOS to con ta ct you to look in to you r com pla in t :
Signed:
Date:
Ple a se re turn this le tte r to the Financial Ombudsman Service using the ir Free post a ddre ss a t:
Freepost BSPS REDRESS SCHEME
Financial Ombudsman Service
London
E14 9SR
For information on the Financial Ombudsman Service’s privacy notice for consumers on how they use your personal information when you contact them, or bring a complaint to the Financial Ombudsman Service, please visit:

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
2R
Consumer within scope/confirming inclusion
[Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We will review the advice we gave you to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] You could be owed money for the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). The FCA requires all firms who advised BSPS members to transfer to be part of a consumer redress scheme. We will review whether our advice was unsuitable and let you know the result by [insert day date month year]. You do not have to do anything unless we need more information from you to complete our review. We will contact you if this is the case. If you do not want us to review the advice you were given, please complete the enclosed form and return it to us by [insert day date month year]. The Financial Conduct Authority (FCA) has gathered evidence that suggests nearly half of the advice given to people to transfer out of the BSPS was unsuitable. Unsuitable advice is advice that was not in line with FCA requirements. We will review the advice we gave you to decide if it was unsuitable. If we find that we gave you unsuitable advice, we will ask you for some information to help us check if you are owed money. We will do this by calculating if our advice caused you a financial loss. If our advice did cause you a loss, we will be required to offer you a payment. The payment will aim to put you in the position you would have been in if we had given you suitable advice. Whatever the result of our review, you will not need to pay anything.

FCA 2022/43
You do not need to do anything unless we ask you for information to help us complete our review. We will contact you if this is the case. We will tell you the result of our review by [insert day date month year]. You do not need to use a claims management company as it will not affect our review and, if you do, they will charge you for the service. If you do not want us to review the advice we gave, please let us know by completing the enclosed form and returning it to us by [insert day date month year]. If you opt-out, you may end up with less money during your retirement than you should have had. You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the FCA, you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you have any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. Yours sincerely, <signature> <name of adviser or customer service> Opting out of the review of the advice given to you [I/We] have enclosed 2 copies of this letter. If you DO NOT want us to review our advice to transfer out of the BSPS:
(1) Tick the box below on 1 copy of this letter; and (2) Send this letter to [me/us] by [date]. CONFIRMATION THAT I DO NOT WANT MY ADVICE REVIEWED I do not want you to review the advice you gave me to transfer out of the BSPS to see if I am entitled to a payment. Please be aware that if you decide you DO NOT want us to review your advice, you could lose out on a payment and may end up with less money during your retirement than you should have had.

FCA 2022/43
4 Annex
3R
Redress determination: confirmation of consumer opt-out [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We will not review the advice we gave you to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] You have told us that you do not want us to review the advice we gave you to transfer out of the British Steel Pension Scheme. As a result, we will not take any further action. If you do not agree that you opted out of the review, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:
 telephone on 0800 023 4567 or 0300 123 9123; or  email addressed to BSPS@financial-ombudsman.org.uk. The Financial Conduct Authority (FCA) has identified that many people were given unsuitable advice to transfer out of the British Steel Pension Scheme (BSPS). We wrote to you on [insert date of letter] to tell you that we would review the advice we gave you to transfer out of the BSPS. You then told us on [insert date of opt out] that you did not want us to do this review. We can confirm that we will not take any further action. This letter does not affect your ability to complain to us or to take legal action. However, if you do not take action promptly, you may find that the time limit has passed for you to do so. Details of our usual complaints procedure are attached.

FCA 2022/43
If you do not agree that you opted out of the review, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly in our decision not to take any further action. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about our decision at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme. You can contact the Financial Ombudsman Service by:
 telephone: 0800 023 4567 or 0300 123 9123; or  email: BSPS@financial-ombudsman.org.uk. You can find out more about the reviews that firms must do at www.fca.org.uk/bsps. If you want to contact the FCA, you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Financial Ombudsman Service leaflet and bespoke referral form Details of how to complain to us

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers who opted-out of providing their contact details. Details in Italics to be pre-populated

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme – Complaint to the Financial Ombudsman Service about Opt-Out from Assessment I have received a letter from my firm saying that I do not want them to review the advice they provided me to transfer out of the British Steel Pension Scheme and that they will not take any further action. I am unhappy with their decision and would like it to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct, or The contact details are not correct and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post
There will be times FOS need to write to you, for example, to send you the Email Post

FCA 2022/43 outcome of your complaint. When FOS do, would you prefer an email or letter? Have you used FOS services before? (This is so FOS can link records) Yes No Do you have any practical needs where we could help by making adjustments – like using large print, Braille or a different language? Please sign to confirm you wou ld like th e FOS to con ta ct you to look in to you r com pla in t:
Signed:
Date:
Ple a se re turn this le tte r to the Financial Ombudsman Service using the ir Free post a ddre ss a t:
Freepost BSPS REDRESS SCHEME
Financial Ombudsman Service
London
E14 9SR
For information on the Financial Ombudsman Service’s privacy notice for consumers on how they use your personal information when you contact them, or bring a complaint to the Financial Ombudsman Service, please visit:

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
4R
Further information request (1): initial request [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme ACTION REQUIRED – We need some information from you to help us review the advice we gave you to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We need some information from you so we can review the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). The information we need is listed below. [If information is being requested from a third party] So that we can collect this information from other parties on your behalf, please sign the attached ‘Letter of Authority’ form and return it to us by [insert Day Date Month Year]. [If information is being requested from the consumer] Please send this information to us by [insert Day Date Month Year]. You can send this information to us by post (return envelope included) or by email: [insert firm email]. If we do not receive this information, we may not be able to complete our review of the advice we gave you and you may end up with less money during your retirement than you should have had. The Financial Conduct Authority (FCA) has identified that many people were given unsuitable advice to transfer out of the BSPS. We wrote to you on [insert date] to confirm that we will review the advice we gave you to transfer out of the BSPS. If our review finds that this advice was unsuitable, we will calculate whether you have suffered a financial loss and if you are owed money. This payment aims to put you in the position you would have been in if we had given you suitable advice and you

FCA 2022/43 had stayed in BSPS. Whatever the result of our review, you will not have to pay anything. We now need more information so we can review the advice we gave you to transfer out of BSPS. [If information is being requested from a third party] So that we can collect this information for you from [insert name of third party the data will be sought from, if known], please sign the attached ‘Letter of Authority’ form and return it by [insert Day Date Month Year]. If we become insolvent before we can complete our review, the Financial Services Compensation Scheme (FSCS) will step in to assess whether you are due a payment. As such, the attached form also asks you to authorise FSCS to collect information on your behalf, should this become necessary. Information on how FSCS collects and uses your data can be found here:
https://www.fscs.org.uk/data-protection-statement/privacy-notice/. [If information is being requested from the consumer] Please send us the information listed below by [insert Day Date Month Year]

[Insert information required in bold, bulleted list].
[Please note you need to delete this information box before you send this letter to the consumer. It is to help you prepare the letter. Firms should only request the information set out in CONRED 4 that is necessary to complete the case review. When you request information from a consumer you should:
only make requests for information that are necessary and which the consumer
can reasonably be expected to provide;
be sensitive when requesting information about a consumer’s personal
circumstances;
ensure the consumer understands what information they have been asked to
provide and in what format;
only ask for information that is likely to be readily accessible to the consumer
(and get the consumer’s authority to approach third parties for information on their behalf);
allow the consumer at least 14 days to respond; and
make clear why the firm is asking for the information and the consequence if
the information is not provided.]
If you do not give us this information, we may not be able to complete our review and you may end up with less money during your retirement than you should have had. You do not need to use a claims management company as it will not affect our review and, if you do, they will charge you for the service. This may mean that you do not receive the full amount of money you may be entitled to.

FCA 2022/43
If you have any problems providing this information or any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. By returning the enclosed form, you consent to us collecting the information on your behalf. You can withdraw that consent at any time by contacting us by phone, email or post [using the same contact details.] [return envelope included] Yours sincerely, <signature> <name of adviser or customer service> Enclosures:

Pre-paid envelope
Letter of Authority

FCA 2022/43
LETTER OF AUTHORITY
To whom it may concern
RE: authority to obtain information on behalf of [enter consumer name] [enter consumer date of birth] [enter consumer current address and previous addresses where relevant] [enter policy number if known / applicable] as part of the Financial Conduct Authority’s British Steel consumer redress scheme I, [enter consumer name] [enter consumer date of birth], authorise [enter firm name] [enter firm address] to collect information on my behalf about my previous and current pension arrangements to assess the advice I was given and, if appropriate, to calculate any money I may be owed following the transfer of my British Steel Pension Scheme pension benefits, as
part of the British Steel consumer redress scheme.
I further authorise the Financial Services Compensation Scheme to collect on my behalf any information it may require to perform its statutory functions, including processing my claim as part of the British Steel consumer redress scheme. Signature:
Date:

FCA 2022/43
4 Annex
5R
Further information request (2): final reminder [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme FINAL REMINDER – We still need some information from you to help us review the advice we gave you to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We wrote to you on [insert Day Date Month Year] to say we need information to help us review the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). We have not yet received this information from you. The information we need from you is listed below. [If information is being requested from a third party] So that we can collect this information from other parties on your behalf, please sign the attached ‘Letter of Authority’ form and return it to us by [insert Day Date Month Year]. [If information is being requested from the consumer] Please send this information to us by [insert Day Date Month Year]. You can send this information to us by post (return envelope included) or by email: [insert firm email]. If we do not receive this information, we may not be able to complete our review of the advice we gave you and you may end up with less money during your retirement than you should have had. The Financial Conduct Authority (FCA) has identified that many people were given unsuitable advice to transfer out of the BSPS. We wrote to you on [insert date] to say that we will review the advice we gave you to transfer out of the BSPS. If our review finds that the advice we gave you was unsuitable and resulted in a financial loss to you, we must give you a payment. This money will aim to put

FCA 2022/43 you in the position you would have been in if we had given you suitable advice and you had stayed in the BSPS. Whatever the result of our review, you will not have to pay anything. [If information is being requested from a third party] So that we can collect this information for you from [insert name of third party the data will be sought from, if known], please sign the attached ‘Letter of Authority’ form and return it by [insert Day Date Month Year]. If we become insolvent before we can complete our review, the Financial Services Compensation Scheme (FSCS) will step in to assess whether you are due a payment. As such, the attached form also asks you to authorise FSCS to collect information on your behalf, should this become necessary. Information on how FSCS collects and uses your data can be found here:
https://www.fscs.org.uk/data-protection-statement/privacy-notice/.

[If information is being requested from the consumer] Please send us the information listed below by [insert Day Date Month Year]

[Insert information required in bold, bulleted list].
Please note you should delete this information box before you send this letter to the consumer. It is to help you prepare the letter. Firms should only request the information set out in CONRED 4 Annex 16R 13.9R that is necessary to complete the case review. When you request information from a consumer you should have regard to Principles 6 and 7 and should:
only make requests for information that are necessary and which the consumer
can reasonably be expected to provide;
be sensitive when requesting information about a consumer’s personal
circumstances;
ensure the consumer understands what information they have been asked to
provide and in what format;
only ask for information that is likely to be readily accessible to the consumer
(and get the consumer’s authority to approach third parties for information on their behalf);
allow the consumer at least 14 days to respond; and
make clear why the firm is asking for the information and the consequence if
the information is not provided.
If you do not give us this information, we may not be able to complete our review and you may end up with less money during your retirement than you should have had. You do not need to use a claims management company as it will not affect our review and, if you do, they will charge you for the service. If you have any problems providing this information or any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. By returning the enclosed form, you consent to us collecting the information on your behalf.

FCA 2022/43
You can withdraw that consent at any time by contacting us by phone, via email or post [using the same contact details] [return envelope included]. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:

Pre-paid envelope
Letter of Authority

FCA 2022/43
LETTER OF AUTHORITY
To whom it may concern
RE: authority to obtain information on behalf of [enter consumer name] [enter consumer date of birth] [enter consumer current address and previous addresses where relevant] [enter policy number if known / applicable] as part of the Financial Conduct Authority’s British Steel consumer redress scheme I, [enter consumer name] [enter consumer date of birth], authorise [enter firm name] [enter firm address] to collect information on my behalf about my previous and current pension arrangements to assess the advice I was given, and if appropriate, to calculate any money I may be owed following the transfer of my British Steel Pension Scheme pension benefits, as
part of the British Steel consumer redress scheme.
I further authorise the Financial Services Compensation Scheme to collect on my behalf any information it may require to perform its statutory functions, including processing my claim as part of the British Steel consumer redress scheme. Signature:
Date:

FCA 2022/43
4 Annex
6R
Redress determination: further information not provided [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We are stopping our review of the advice we gave you to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We are not able to complete our review of the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). This is because you did not provide the information we asked for. We wrote to you on [insert dates of initial letter and reminder letter] to tell you that we needed some information from you to help us complete this review. We also tried to contact you [insert details] without success. As a result, your case is no longer covered by the scheme and we are stopping our review. If you are unhappy with our decision, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:

telephone on 0800 023 4567 or 0300 123 9123; or
email addressed to BSPS@financial-ombudsman.org.uk .
What you can do next
This letter does not affect your ability to complain to us or take legal action. However, if you do not take action promptly, you may find that the time limit has passed for you to do so. If you still want us to review the advice we gave you, you should make a complaint to us

FCA 2022/43 outside of the scheme, through our usual complaints procedure. Details of how to complain are attached. If you are unhappy with our decision that we are unable to review the advice we gave you because you did not provide the information we asked for, you can contact the Financial Ombudsman Service within 6 months of the date of this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the consumer redress scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about our decision at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme. You can contact the Financial Ombudsman Service by:

telephone: 0800 023 4567 or 0300 123 9123; or
email: BSPS@financial-ombudsman.org.uk.
You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the Financial Conduct Authority (FCA), you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Financial Ombudsman Service leaflet and bespoke referral form Details of how to complain to us

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers where further information was not provided for assessment. Details in Italics to be pre-populated.

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme - Complaint to the Financial Ombudsman Service about Further Information Required Assessment I have received a letter from my firm saying that they will not be reviewing the advice they provided on my British Steel Pension Scheme because I have not provided further information they requested to determine the suitability of advice. I am unhappy with that decision and would like it to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct; or The contact details are not correct, and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post
There will be times FOS need to write to you, for example, to send you the Email Post

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
7R
Notification of finding of unsuitable advice [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We gave you unsuitable advice to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We have reviewed the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). Our review has found that we gave you unsuitable advice. This means that you may be entitled to a payment. But first we need to calculate whether our unsuitable advice caused you a financial loss and whether we owe you any money. We will tell you the result of our calculation by [insert date]. How did we reach this decision? We have found that the advice we gave you to transfer out of the BSPS was unsuitable. [Insert reason: summarise the information in the assessment template which led to the finding that the advice was unsuitable.] We will now take steps to calculate whether our advice caused you a financial loss and, if so, how much money we owe you. Any money we pay you will aim to put you in the position you would have been in had you been given suitable advice and stayed in the BSPS. Whatever the result of our calculation, you will not have to pay anything. We will send you a separate letter to ask you for information to help us complete the calculation. Once we have this information, we can complete the calculation. We will tell you the result of the calculation by [insert date]. You do not need to use a claims management company as it will not affect our calculation and, if you do, they will charge you for the service.

FCA 2022/43
You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the Financial Conduct Authority (FCA), you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you have any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. Yours sincerely, <signature> <name of adviser or customer service>

FCA 2022/43
4 Annex
8R
Redress determination: unsuitable advice, no causation [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We gave you unsuitable advice to transfer out of the British Steel Pension Scheme, but it did not cause any loss you may have suffered Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We have reviewed the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). Our review found that the advice we gave you was unsuitable, but our unsuitable advice did not cause any loss you may have suffered. This means that we will not take any further steps about the advice we gave you. If you are unhappy with our decision, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:
 telephone on 0800 023 4567 or 0300 123 9123; or  email addressed to BSPS@financial-ombudsman.org.uk How did we reach this decision? [Insert reason: summarise the information in the assessment template which led to the finding that the unsuitable advice did not cause any loss the consumer may have suffered.] What you can do next If you are unhappy with our decision that our unsuitable advice did not cause you any loss you may have suffered, you should contact the Financial Ombudsman Service within 6

FCA 2022/43 months of the date on this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain at www.financial-ombudsman.org.uk/consumers/complaints-canhelp/pensions-annuities/transfers-from-workplace-pensions-and-the-pensions-review/britishsteel-pension-scheme. You can contact the Financial Ombudsman Service by:
 telephone: 0800 023 4567 or 0300 123 9123; or  email: BSPS@financial-ombudsman.org.uk. We will pass your details to the Financial Conduct Authority (FCA). They may contact you to see if you would like the Financial Ombudsman Service to review our decision. If you do not want us to pass your details to the FCA, please tell us in writing within 14 days of this letter. You can write to us by letter or email at [insert details]. You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the FCA, you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Financial Ombudsman Service leaflet and bespoke referral form

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers who have received unsuitable advice with no causation. Details in Italics to be pre-populated.

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Date of Suitability Assessment: [X]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme - Complaint to the Financial Ombudsman Service about Unsuitable Advice Assessment I have received an assessment from my firm saying that the advice I received to transfer out of my British Steel Pension Scheme was unsuitable but was not the cause of any loss I may have suffered. I am unhappy with that assessment and would like it to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct; or The contact details are not correct and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post

FCA 2022/43
There will be times FOS need to write to you, for example, to send you the outcome of your complaint. When FOS do, would you prefer an email or letter? Email Post Have you used FOS services before? (This is so FOS can link records) Yes No Do you have any practical needs where we could help by making adjustments – like using large print, Braille or a different language? Please sign to confirm you wou ld like th e FOS to con ta ct you to look in to you r com pla in t :
Signed:
Date:
Ple a se re turn this le tte r to the Financial Ombudsman Service using the ir Free post a ddre ss a t:
Freepost BSPS REDRESS SCHEME
Financial Ombudsman Service
London
E14 9SR
For information on the Financial Ombudsman Service’s privacy notice for consumers on how they use your personal information when you contact them, or bring a complaint to the Financial Ombudsman Service, please visit:

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
9R
Redress determination: suitable advice
[Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We gave you suitable advice to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We have reviewed the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). Our review found that the advice we gave you was suitable. This means that we will not take any further steps about the advice we gave you. If you are unhappy with our decision, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:
 telephone on 0800 023 4567 or 0300 123 9123; or  email addressed to BSPS@financial-ombudsman.org.uk. How did we reach this decision? [Insert reason: summarise the information in the assessment template which led to the finding that the advice was suitable.] What you can do next If you are unhappy with our decision that the advice we gave you was suitable, you can ask the Financial Ombudsman Service to review the decision within 6 months of the date of this

FCA 2022/43 letter. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain at http://www.financial-ombudsman.org.uk/consumers/complaints-canhelp/pensions-annuities/transfers-from-workplace-pensions-and-the-pensions-review/britishsteel-pension-scheme. You can contact the Financial Ombudsman Service by:
 telephone: 0800 023 4567 or 0300 123 9123; or  email: BSPS@financial-ombudsman.org.uk. We will pass your details to the Financial Conduct Authority (FCA). They may contact you to see if you would like the Financial Ombudsman Service to review our decision. If you do not want us to pass your details to the FCA, please tell us in writing within 14 days of the date of this letter. You can write to us by letter or email at [insert details]. You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the FCA, you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Financial Ombudsman Service leaflet and bespoke referral form

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers who have received a suitable assessment. Details in Italics to be pre-populated.

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme - Complaint to the Financial Ombudsman Service about Suitable Advice Assessment I have received an assessment from my firm saying that the advice I received to transfer out of my British Steel Pension Scheme was suitable. I am unhappy with that assessment and would like it to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct; or The contact details are not correct and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post
There will be times FOS need to write to you, for example, to send you the outcome of your complaint. When FOS do, would you prefer an email or letter? Email Post

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
10R
Redress calculation, further information: initial request [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme ACTION REQUIRED – We need some information from you to calculate whether we owe you money Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We wrote to you on [insert date] to say that we gave you unsuitable advice to transfer out of the British Steel Pension Scheme (BSPS). We said we would calculate whether you had suffered a financial loss and, if so, how much money we owe you. Any money we pay you will aim to put you in the position you would have been in had you been given suitable advice and stayed in the BSPS. Whatever the result of our calculation, you will not have to pay anything. We need more information from you so we can calculate whether we owe you any money. ACTION YOU NEED TO TAKE We need information from you so we can calculate whether you suffered financial loss as a result of transferring out of the British Steel Pension Scheme (BSPS), and whether we owe you any money. [If information is being requested from the consumer] The information we need is listed in the box below. Please send this information to us by [insert date - 14days from the date of this letter]. You can send this information to us by post (return envelope included) or by email: [insert firm email]. [If information is being requested from a third party] So that we can collect this information from other parties on your behalf, please sign the attached ‘Letter of Authority’ form and return it to us by [insert date- 14 days from the date of this letter]. [All letters]

FCA 2022/43
If you would like us to, we can also calculate how much money can be paid into your pension to ensure the money is invested for your retirement. If you would like us to do this, please complete and return the attached ‘Payment into a pension’ form by [insert date- 14 days from the date of this letter]. You also need to let us know about any other losses you think we owe you money for. To do this, please complete and return the attached ‘Other Losses’ form to us by [insert date – 1 month from the date of this letter]. If we do not receive this information, we might not be able to calculate whether we owe you any money. This means that you may end up with less money in your retirement than you should have had. [If information is being requested from a third party] Asking for information from other firms So that we can collect this information for you from [insert name of third party the data will be sought from, if known], please sign the attached ‘Letter of Authority’ form and return it by [insert Day Date Month Year – 1 month from date of this letter]. If we become insolvent before we can complete our review, the Financial Services Compensation Scheme (FSCS) will step in to assess whether you are due a payment. As such, the attached form also asks you to authorise FSCS to collect information on your behalf, should this become necessary. Information on how FSCS collects and uses your data can be found at https://www.fscs.org.uk/data-protection-statement/privacy-notice/. If we do not receive this information, we might not be able to calculate whether we owe you any money. This could mean that you end up with less money during your retirement than you should have had. [If information is being requested from the consumer] The information we need from you

Please provide us with the following information by [insert day date month year]
so we can calculate how much money we may owe you:
[List information required to calculate lump sum redress set out in CONRED 4 Annex 21] If we do not receive this information, we might not be able to calculate whether we owe you any money. This could mean that you end up with less money during your retirement than you should have had.
If you want us to calculate how much of the money we owe you can be paid into
your pension, please also provide the following information.
[List information required to calculate how much redress can be augmented set out in CONRED 4.3.14R(2)]

FCA 2022/43
If we do not receive this information, we can still calculate how much money we owe you, but we will not be able to calculate the amount you can pay into your pension; we will offer you a lump sum instead. [Please note you should delete the information in this box before you send this letter to the consumer. It is to help you prepare the letter. Firms should only request the information set out in CONRED 4 Annex 16R 13.30R that is necessary to calculate redress. When you request information from a consumer you should:

only make requests for information that are necessary and which the consumer can
reasonably be expected to provide;
be sensitive when requesting information about a consumer’s personal circumstances;
ensure the consumer understands what information they have been asked to provide
and in what format;
only ask for information that is likely to be readily accessible to the consumer (and
obtain the consumer’s authority to approach third parties for information on their behalf)
allow the consumer at least 14 days to respond; and
make clear why the firm is asking for the information and the consequence if the
information is not provided.]
[All letters]
How you want the money we owe you to get paid You have a choice in how you receive this payment.
You can choose to pay this money into your pension. This ensures the money is
invested for your retirement.
There may be restrictions on whether and how much you can pay into your pension. If you are interested in this option, we can work out how much money you can pay into your pension under current tax regulations. We can do this free of charge whether you choose to invest in your pension or not. You may have to give us additional information so we can do this. If not all of the money can be paid into your pension, then the balance will be paid to you as a lump sum. Pensions are designed to help support you financially in your retirement. Adding this payment to your pension will improve your retirement income. This payment aims to provide you with the extra retirement income you would have been given if you had not transferred out of your BSPS.
You can choose to receive it as a lump sum into your bank account.

FCA 2022/43
If you receive payment as a lump sum you should get advice on how to invest it. If you do not invest it, you risk losing out on the income the payment is meant to give you during your retirement. If you are thinking of saving or re-investing the money you may get, MoneyHelper is there to help. Backed by government, it ensures that everyone in the UK can easily access the information they need to make the right financial decisions. The service is free and impartial, and you can visit the website at www.moneyhelper.org.uk or call 0800 138 7777 for money advice, 0800 011 3797 for pension advice. You can also contact an FCA-regulated financial adviser to seek advice, but you may have to pay for this service. You may also find the FCA’s Scam Smart guidance helpful. If you want us to calculate how much of the money we owe you can be paid into your pension, you need to let us know by completing and returning the form ‘Payment into a pension’ by [insert date – 1 month from issue of this letter]. If we do not receive your completed form, we can still calculate how much money we owe you but we will not be able to calculate the amount you can pay into your pension, and we will offer you a lump sum instead. Do you think we owe you money for other losses? You should also tell us if you have suffered any other losses because of our unsuitable advice. These losses could include money you had to pay to get tax advice, or any tax charges you had to pay. In all cases, any payment calculation will include the original fee charged for the unsuitable advice [if consumer has already switched to a new adviser] the fees you paid to change your adviser, and any other past advice fees paid out of your transferred pension. [Add if the transfer advice firm has a current advice arrangement with the firm] If you decide you want to change to a new advice firm, you can terminate your arrangement with us but it is important you tell us in the ‘Other Losses’ form. This will allow us to add an extra amount to what we may owe you to pay for the new advice. This amount will be calculated according to FCA rules. When looking for a new adviser, check what their ongoing adviser fees are. If we owe you any money, your calculation will only cover fees up to 0.5% of your fund each year. If their fees are more than 0.5% you may end up with less retirement income as a result. We may need to ask you for more information so we can decide whether we think we owe you more money for these other losses. If you want us to consider whether we owe you money for other losses, you need to let us know by completing and returning the form ‘Other Losses’ by [insert date – 1 month from issue of this letter]. If we do not receive your completed form, we can still calculate how much money we owe you, but we will not be able to add any money for other losses. What should you do now?

FCA 2022/43
[If some information needs collecting from the consumer] The information we need from you is listed in the box above. Please send this information to us by [insert date- 14 days from the date of this letter]. [If letter of authority is required to collect the information from Third Parties] We can ask for some of this information from other firms on your behalf, but we need you to agree to this first. If you are happy for us to ask other firms for the information we need, you need to complete and return to us the attached ‘Letter of Authority’ form by [insert date- 14 days from the date of this letter] You need to let us know if you want us to calculate how much of the money we owe you can be paid into your pension. Please let us know by completing and returning to us the attached ‘Payment into a pension’ form by [insert date- 14 days from the date of this letter]. You also need to let us know about any other losses you think we owe you money for. Please let us know by completing and returning the attached ‘Other Losses’ form called by [Insert date – 14 days from the date of this letter]. If you do not provide this information you may end up with less money in your retirement than you should have had. You do not need to use a claims management company as it will not affect our calculation and, if you do, they will charge you for the service. If you need help with the information we need from you or have any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. By returning the enclosed letter, you consent to us collecting the information on your behalf. You can withdraw this consent at any time by contacting us [using the same contact details]. You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the Financial Conduct Authority (FCA), you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:

Pre-paid envelope
Letter of Authority form [if required].
Other Losses form
Payment into a pension form

FCA 2022/43
LETTER OF AUTHORITY
To whom it may concern
RE: authority to obtain information on behalf of [enter consumer name] [enter consumer date of birth] [enter consumer current address and previous addresses where relevant] [enter policy number if known / applicable] as part of the Financial Conduct Authority’s British Steel consumer redress scheme I, [enter consumer name] [enter consumer date of birth], authorise [enter firm name] [enter firm address] to collect information on my behalf about my previous and current pension arrangements to calculate if I am owed any money following the unsuitable advice to transfer my British Steel Pension Scheme pension benefits, as part of the British Steel consumer redress scheme. I further authorise the Financial Services Compensation Scheme to collect on my behalf any information it may require to perform its statutory functions, including processing my claim as part of the British Steel consumer redress scheme. Signature:
Date:

FCA 2022/43
Other Losses
[Insert file reference]
I would like [name of firm] to consider if I am owed money for other losses.  [if the firm is in a current advice arrangement with the consumer ]I want to terminate my advice arrangement with [name of the firm] with immediate effect to look for a new adviser, and for [name of firm] to pay me an extra amount to get advice from a new adviser (this amount will be calculated according to FCA rules).  Other losses. Please describe the additional losses here and send in supporting documents where you can:
(You do not have to enter any of the information below if you are not sure) I feel that the extra money owed to me for these additional losses should be:
Enter amount: £_____________________________ Date you suffered or will suffer these losses: _____________ Name:___________________ Signed:__________________ Date:____________________

FCA 2022/43
Payment into a pension
[Insert file reference]
I would like [name of the firm] to calculate how much of the money they owe me can be paid into my pension. [Where consumer will be arranging payment into their pension directly with their pension provider or third-party adviser] If you select this option, you should contact your pension provider or adviser as soon as possible to let them know you are planning on paying some money into your pension, and what steps you should take to do so. I am NOT interested in having my payment paid into my pension. Name:___________________ Signed:__________________ Date:____________________

FCA 2022/43
4 Annex
11R
Redress calculation, further information request: final reminder [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme FINAL REMINDER – We still need some information from you to calculate whether we owe you money Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We wrote to you on [insert date] to say we need information to help us calculate any money we may owe you for our advice to transfer out of the British Steel Pension Scheme. We have not yet received the information from you. ACTION YOU NEED TO TAKE We still need information from you so we can calculate whether we owe you money. [If information requested from consumer not received] The information we need is listed in the box below. Please send this information to us by [insert date - 1 month from date of initial letter]. You can send this information to us by post (return envelope included) or by email: [insert firm email]. [If letter of authority not received] So that we can collect this information from other firms on your behalf, please sign the attached ‘Letter of Authority’ form and return it to us by [insert date- 1 month from date of initial letter]. [If request to calculate augmentation not received] If you would like us to, we can also calculate how much money can be paid into your pension to ensure the money is invested for your retirement. If you would like us to do this, please complete and return the attached ‘Payment into a pension’ form by [insert date14 days from the date of this letter]. [If consequential loss notification not received] You also need to let us know about any other losses you think we owe you money for.

FCA 2022/43
Please let us know by completing and returning the attached ‘Other Losses’ form by [insert date - 14 days from the date of this letter]. If we do not receive this information, this could mean that you end up with less money during your retirement than you should have had. [If letter of authority not returned] Asking for information from other firms So that we can collect this information for you from [insert name of third party the data will be sought from, if known], please sign the attached ‘Letter of Authority’ form and return it to us by [insert date - 14 days from the date of this letter]. If we become insolvent before we can complete our review, the Financial Services Compensation Scheme (FSCS) will step in to assess whether you are due a payment. As such, the attached form also asks you to authorise FSCS to collect information on your behalf, should this become necessary. Information on how FSCS collects and uses your data can be found here:
https://www.fscs.org.uk/data-protection-statement/privacy-notice/. If we do not receive this information, we might not be able to calculate whether we owe you any money. This could mean that you end up with less money during your retirement than you should have had. [If information from the consumer is not returned] The information we need from you Please provide us with the following information by [insert date] so we can calculate how much money we may owe you:
[List information required to calculate lump sum redress set out in CONRED 4 Annex 21] If we do not receive this information, we might not be able to calculate whether we owe you any money. This could mean that you end up with less money during your retirement than you should have had. If you want us to calculate how much of the money we owe you can be paid into your pension, please also provide the following information. [List information required to calculate how much redress can be augmented set out in CONRED 4.3.14R(2)] If we do not receive this information, we can still calculate how much money we owe you, but we will not be able to calculate the amount you can pay into your pension; we will offer you a lump sum instead. [Please note you should delete the information in this box before you send this letter to the consumer. It is to help you prepare the letter. Firms should only request the information set out in CONRED 4 Annex 21R 13.30R that is necessary to complete the case review.

FCA 2022/43
When you request information from a consumer you should:

only make requests for information that are necessary and which the consumer can
reasonably be expected to provide;
be sensitive when requesting information about a consumer’s personal circumstances;
ensure the consumer understands what information they have been asked to provide
and in what format;
only ask for information that is likely to be readily accessible to the consumer (and
obtain the consumer’s authority to approach third parties for information on their behalf);
allow the consumer at least 14 days to respond; and
make clear why the firm is asking for the information and the consequence if the
information is not provided.]
How you want the money we owe you to get paid You have a choice in how you receive this payment.
You can choose to pay this money into your pension. This ensures the money is
invested for your retirement.
There may be restrictions on whether and how much you can pay into your pension. If you are interested in this option, we can work out how much money you can pay into your pension under current tax regulations. We can do this free of charge, whether you choose to invest in your pension or not. You may have to give us additional information so we can do this. If not all of the money can be paid into your pension, then the balance will still be paid to you as a lump sum. Pensions are designed to help support you financially in your retirement. Adding this payment to your pension will improve your retirement income. This payment aims to provide you with the extra retirement income you would have been given if you had not transferred out of your BSPS.
Alternatively, you can choose to receive it as a lump sum into your bank account.
If you receive payment as a lump sum, you should get advice on how to invest it. If you do not invest it, you risk losing out on the income the payment is meant to give you during your retirement. If you are thinking of saving or re-investing the money you may get, MoneyHelper is there to help. Backed by government, it ensures that everyone in the UK can easily access the information they need to make the right financial decisions. The service is free and impartial, and you can visit the website at www.moneyhelper.org.uk or call 0800 138 7777 for money advice, 0800 011 3797 for pension advice.

FCA 2022/43
You can also contact an FCA-regulated financial adviser to seek advice, but you may have to pay for this service. You may also find the FCA’s Scam Smart guidance helpful. If you want us to calculate how much of the money we owe you can be paid into your pension, you need to let us know by completing and returning the attached ‘Payment into a pension’ form by [insert date – 14 days from the date of this letter]. If we do not receive your completed form, we can still calculate how much money we owe you, but we will not be able to calculate the amount you can pay into your pension, and we will offer you a lump sum instead. Do you think we owe you money for other losses? You should also tell us if you have suffered or will suffer any other losses because of our unsuitable advice. These losses could include money you had to pay to get tax advice, or any tax charges you had to pay. In all cases, any payment calculation will include the original fee charged for the unsuitable advice [if consumer has already switched to a new adviser] the fees you paid to change your adviser, and any other past advice fees paid out of your transferred pension. [Add in only if the transfer advice firm has a current advice arrangement with the firm] If you decide you want to change to a new advice firm, you can terminate your arrangement with us but it is important you tell us in the ‘Other Losses’ form. This will allow us to add an extra amount to what we may owe you to pay for the new advice. This amount will be calculated according to FCA rules. When looking for a new adviser, check what their ongoing adviser fees are. If we owe you any money, your calculation will only cover fees up to 0.5% of your fund each year. If their fees are more than 0.5% you may end up with less retirement income as a result. We may need to ask you for more information so we can decide whether we think we owe you more money for these other losses. If you want us to consider whether we owe you money for other losses, you need to let us know by completing and returning the ‘Other Losses’ form by [insert date – 14 days from the date of this letter]. If we do not receive your completed form, we can still calculate how much money we owe you, but we will not be able to add any money for other losses. What should you do now? [If some information from consumer not returned] The information we need is listed in the box above. Please send this information to us by [insert date- 14 days from the date of this letter]. [If letter of authority not returned] We can ask for some of this information from other firms on your behalf, but we need you to agree to this first. If you are happy for us to ask other firms for information we need, you need to complete and return the attached ‘Letter of Authority’ form by [insert date- 14 days from the date of this letter]. [If augmentation calculation request not returned]

FCA 2022/43
You need to let us know if you want us to calculate how much of the money we owe you can be paid into your pension. Please let us know by completing and returning the attached ‘Payment into a pension’ form by [insert date- 14 days from the date of this letter]. [If consequential loss notification not received] You also need to let us know about any other losses you think we owe you money for. Please let us know by completing and returning the attached ‘Other Losses’ form by [insert date- 14 days from the date of this letter]. You do not need to use a claims management company as it will not affect our calculation and, if you do, they will charge you for the service. If you need help with the information we need from you or have any questions about our review, you can phone or email us [insert contact details]. We are available between [insert contact hours]. By returning the enclosed letter, you consent to us collecting the information on your behalf. You can withdraw this consent at any time by contacting us [using the same contact details.] Yours sincerely, <signature> <name of adviser or customer service> Enclosures:

Pre-paid envelope
[Only enclose forms not returned]
Letter of Authority form
Other Losses form
Payment into a pension form

FCA 2022/43
LETTER OF AUTHORITY
To whom it may concern
RE: authority to obtain information on behalf of [enter consumer name] [enter consumer date of birth] [enter consumer current address and previous addresses where relevant] [enter policy number if known / applicable] as part of the Financial Conduct Authority’s British Steel consumer redress scheme I, [enter consumer name] [enter consumer date of birth], authorise [enter firm name] [enter firm address] to collect information on my behalf about my previous and current pension arrangements to calculate if I am owed any money following the unsuitable advice to transfer my British Steel Pension Scheme pension benefits, as part of the British Steel consumer redress scheme. I further authorise the Financial Services Compensation Scheme to collect on my behalf any information it may require to perform its statutory functions, including processing my claim as part of the British Steel consumer redress scheme. Signature:
Date:

FCA 2022/43
Other Losses
[Insert file reference]
I would like [name of firm] to consider if I am owed money for additional losses. [if the firm is in a current advice arrangement with the consumer ]I want to terminate my advice arrangement with [name of the firm] with immediate effect to look for a new adviser, and for [name of firm] to pay me an extra amount to get advice from a new adviser (this amount will be calculated according to FCA rules). Other losses. Please describe the additional losses here and send in supporting documents where you can:
(You do not have to enter any of the information below if you are not sure) I feel that the extra money owed to me for these additional losses should be:
Enter amount : £_____________________________ Date you suffered or will suffer these losses: _____________ Name:___________________ Signed:__________________ Date:____________________

FCA 2022/43
Payment into a pension
[Insert file reference]

I would like [name of firm] to calculate how much of the money they owe me can
be paid into my pension
[Where consumer will be arranging payment into their pension directly with their pension provider or third-party adviser] If you select this option, you should contact your pension provider or adviser as soon as possible to let them know you are planning on paying some money into your pension, and what steps you should take to do so.
I am NOT interested in having my payment paid into my pension
Name:___________________
Signed:__________________
Date:____________________

FCA 2022/43
4 Annex
12R
Redress determination: Redress calculation – information not provided [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We are stopping our calculation of any money we may owe you Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We are not able to complete the calculation of any money we may owe you due to the unsuitable advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). This is because you did not give us the information we asked for in our letters of [insert dates of initial letter and reminder letter]. If you are unhappy with our decision, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:
 telephone on 0800 023 4567 or 0300 123 9123; or  email addressed to BSPS@financial-ombudsman.org.uk. Why we are stopping our calculation of any money we may owe you We wrote to you on [insert dates of initial letter and reminder letter] to tell you that we needed information from you to complete this calculation. We also tried to contact you [insert details] without success. What you can do next You can still complain to us or take legal action. However, if you do not take action promptly, you may find that the time limit has passed for you to do so.

FCA 2022/43
If you are unhappy with our decision to stop our calculation of any money we may owe you, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the consumer redress scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about our decision at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme. You can contact the Financial Ombudsman Service by:
 telephone: 0800 023 4567 or 0300 123 9123; or  email: BSPS@financial-ombudsman.org.uk. If you still want us to review the advice we gave you, you should make a complaint to us by [insert details on how to complain]. You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the Financial Conduct Authority (FCA), you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Financial Ombudsman Service leaflet and bespoke referral form

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers where redress calculation could not be conducted due to insufficient information provided. Details in Italics to be pre-populated.

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme - Complaint to the Financial Ombudsman Service about Redress calculation - Further Information Required I have received a letter from my firm saying they are not able to complete the calculation of any money owed on transferring out of my British Steel Pension Scheme because I have not provided further information they requested. I am unhappy with that decision and would like it to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct; or The contact details are not correct and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post

FCA 2022/43
There will be times FOS need to write to you, for example, to send you the outcome of your complaint. When FOS do, would you prefer an email or letter? Email Post Have you used FOS services before? (This is so FOS can link records) Yes No Do you have any practical needs where we could help by making adjustments – like using large print, Braille or a different language? Please sign to confirm you wou ld like th e FOS to con ta ct you to look in to you r com pla in t:
Signed:
Date:
Ple a se re turn this le tte r to the Financial Ombudsman Service using the ir Free post a ddre ss a t:
Freepost BSPS REDRESS SCHEME
Financial Ombudsman Service
London
E14 9SR
For information on the Financial Ombudsman Service’s privacy notice for consumers on how they use your personal information when you contact them, or bring a complaint to the Financial Ombudsman Service, please visit:

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
13R
Redress determination: Result of redress calculation [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme ACTION REQUIRED – Payment for unsuitable advice to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] [If not owed money] We wrote to you on [insert date] to tell you that the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS) was unsuitable. We have now found that we do not owe you money for the advice we gave you to transfer out of the BSPS. [If owed money] We wrote to you on [insert date] to say that we owe you money for the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS) [, and you told us you would like us to calculate how much of this money can be paid into your pension – delete if not applicable]. [If not owed money] We have found that we do not owe you money for the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS). [If owed money] We have calculated the amount we owe you. [Where the money is paid as augmentation]

If you want to have the money we owe you added to your pension, the total amount that will
be added to your pension is £[insert amount including HMRC relief]; or

FCA 2022/43

If you do not want the money we owe you added to your pension, we can pay you a lump
sum of £[insert amount].
[Where the money is paid part augmentation part lump sum]
If you want to have the money we owe you added to your pension, the total amount that will
be added to your pension is £[insert amount including HMRC relief], and we will pay you the rest of the money we owe you in a lump sum of £[insert amount]; or
If you do not want the money we owe you added to your pension, we can pay you all the
money we owe you in a lump sum of £[insert amount].
[Where augmentation is not possible]
We have calculated that we cannot add the money we owe you into your pension. So we will pay you the money we owe you in a lump sum of £[insert amount]. [Where consumer did not ask for augmentation or provide the necessary information to calculate this] We were not able to calculate how much of the money we owe you can be paid into your pension because you [did not ask us for this / asked for this but did not provide us with the information we needed – delete as applicable]. [We wrote to you on [insert dates of initial letter and reminder letter] to tell you that we needed information from you to complete the calculation. We also tried to contact you [insert details] without success – delete if not applicable.] So, we calculated the money we owe you in a lump sum of £[insert amount]. [If a consequential loss claim was submitted and the information to calculate this was provided] This amount includes £[insert amount] for the other losses you told us about / does not include any extra money for the losses you told us about because [insert reason]. [If a consequential loss claim was submitted, but the information to calculate this was not provided] You asked us to calculate other losses, but you did not provide us with the information we needed to calculate this. [We wrote to you on [insert dates of initial letter and reminder letter] to tell you that we needed information from you to complete the calculation. We also tried to contact you [insert details] without success – delete if not applicable.] We have therefore been unable to calculate your claim for other losses. What should you do now? Look at the calculation report and check that the information about you which we used for the calculation is right. [If owed money] This is to make sure we are offering you the right amount. Contact us immediately if any information in the calculation report is wrong. [If the comparator scheme used for the calculation provides lower redress] Pay close attention to the BSPS scheme we used for your calculation when you check the calculation report to make sure the money we owe you is the right amount. [Where full or part augmentation possible]

FCA 2022/43
Decide if you want the money we owe you added to your pension or if you prefer to be paid in a lump sum. [Where consumer arranges payment into their pension] If you want the money we owe you added to your pension, contact your pension provider or adviser to arrange this.

If you would like to accept this offer, you must sign and return the attached ‘Settlement form’ by [Insert date – 3 months from date of this letter].

[All letters]
If you are unhappy with our decision, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. We have enclosed a referral form that you can use to refer your complaint on to them.

You can contact the Financial Ombudsman Service by telephone on 0800 023 4567 or 0300 123 9123 or by email addressed to BSPS@financial-ombudsman.org.uk.

[If owed money]
The payment aims to put you back in the financial position you would have been in if you had been given suitable advice and stayed in the BSPS. that the redress calculation assumes this payment will be invested for your retirement and paid directly into your current pension where possible. Pensions are designed to help support you financially in your retirement. Adding this payment to your pension will help improve your retirement income. This amount is intended to provide you with the extra retirement income you would have been given if you had stayed in your BSPS. If you receive the payment as a lump sum, you should get advice on how to invest it. If you do not invest it, you risk losing out on the income this money is meant to give you during your retirement. Paying the money we owe you into your pension [Where the money is paid as augmentation] If you accept this offer we will arrange to pay £[insert offer amount] into your current pension / to send you a cheque for £[insert offer amount], which you should arrange to pay into your current pension with your pension provider or adviser. Your pension provider will claim £[insert amount] tax relief from HMRC, which means the total amount that will be added to your pension is £[insert amount].

If you want to accept our offer to pay the money we owe you into your pension, you must tell us by [insert day date month year]. Please [confirm/sign below/etc.] by [insert date] and we will arrange payment to you. [Where the money is paid as part augmentation part lump sum] If you accept this offer we will arrange to pay £[insert offer amount] into your current pension / to send you a cheque for £[insert offer amount], which you should arrange to pay

FCA 2022/43 into your current pension with your pension provider or adviser. Please see the attached report for a breakdown of how we have calculated this amount. Your pension provider will claim £[insert amount] tax relief from HMRC, which means the total amount that will be added to your pension is £[insert amount]. We will also pay you £[insert amount] as a lump sum. If you want to accept our offer to pay the money we owe you into your pension and the rest of it in a lump sum, you must tell us by [insert day date month year]. Please [confirm/sign below/etc] by [insert date] and we will arrange payment to you. [Where augmentation is not possible] We have calculated that we cannot add the money we owe you into your pension. So, we will pay you the money we owe you in a lump sum instead. [if owed money] Paying the money we owe you in a lump sum [Where full or part augmentation offer available] If you do not want the money we owe you added to your pension, you can choose to receive the money we owe you in a lump sum instead. [If owed money] We have calculated that we owe you £[insert redress amount] as a lump sum. [If applicable] We did not calculate how much of the money we owe you can be paid into your pension, because you asked us not to [OR] We were not able to calculate how much of the money we owe you can be paid into your pension, because you did not [ask us for this/provide us with the information – delete as applicable]. [If consumer did not indicate whether they wanted an augmentation calculation] If you would like us to, we can work out how much money you can pay into your pension under current tax regulations. We can do this free of charge whether you choose to invest in your pension or not. You may have to give us additional information so we can do this. If not all of the money can be paid into your pension, then the balance will be paid to you as a lump sum. If you would like us to do this, please complete and return the attached ‘Payment into a pension’ form by [insert date – 3 months from the date of this letter]. [If owed money] If you are thinking of saving or re-investing the money we owe you, MoneyHelper is there to help. Backed by the government, it ensures that everyone in the UK can easily access the information they need to make the right financial decisions. The service is free and impartial, and you can visit the website at www.moneyhelper.org.uk or call 0800 138 7777 for money advice, 0800 011 3797 for pension advice. You can also contact an FCA-regulated financial adviser to seek advice, but you may have to pay for this service. You may also find the FCA’s Scam Smart guidance helpful. How did we reach this decision?

FCA 2022/43
[All letters]
We have calculated this amount with the FCA calculator based on the FCA’s rules. We have enclosed a summary of the information about you that we used to calculate the amount owed to you, and you should carefully check that this information is right [if owed money], to make sure we are offering you the right amount. If any of the information is wrong, you should contact us immediately. You can also ask us for a full calculation report, which includes all the information we used to calculate your offer. [If the comparator scheme used for the calculation provides lower redress] Pay close attention to the BSPS scheme we used for your calculation when you check the calculation report, to make sure the money we owe you is the right amount. Our information shows that if you had stayed in BSPS, you were likely to have chosen the [select as appropriate: New BSPS scheme or Old BSPS scheme] / We did not have any information to show whether you were more likely to choose the Old BSPS scheme or New BSPS scheme if you had stayed in BSPS, so the FCA’s rules say that the New BSPS scheme should be used for your calculation. If the [select as appropriate: New BSPS scheme / Old BSPS scheme] had been used instead, we would owe you an extra £[enter difference between higher paying scheme and lower paying scheme]. [If a consequential loss claim was submitted and the necessary information was provided] This amount includes £[insert amount] for the other losses you told us about [[add if partially including the amount claimed for] and we did not pay you the full amount you asked for because [reason]] [OR] This amount does not include any extra money for the losses you told us about because [insert reason]. [All letters] If you are not happy with the amount we are offering, you can contact the Financial Ombudsman Service or the FCA helpline. What should you do now? Look at the calculation report and check that the information about you which we used for the calculation is right. [If the comparator scheme used for the calculation provides lower redress] Pay close attention to the BSPS scheme that we used for your calculation. This is to make sure we are offering you the right amount. [Where full or part augmentation possible] Decide if you want the money we owe you to be added to your pension or, if you prefer, to be paid in a lump sum. [Where consumer arranges payment into their pension] If you want the money we owe you to be added to your pension, contact your pension provider or adviser to arrange this. [If money is owed]

FCA 2022/43
If you would like to accept this offer, you must sign and return the attached form by [insert date – 3 months from the date of this letter]. [All letters] If you are unhappy with this outcome, you should contact the Financial Ombudsman Service within 6 months of the date of this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly.

[If owed money]
Help with your decision
If you are not happy with the amount we are offering, you can contact the Financial Ombudsman Service or the FCA helpline. If you are unsure about how to invest any money we owe you, you can contact free guidance services such as MoneyHelper or you can contact an FCA-regulated financial adviser to seek advice. You may also find the FCA’s Scam Smart guidance helpful. Your offer also covers your future investment costs, and this money is there to help reach your retirement goals. [Only for consumers entitled to initial advice fee] Your offer also includes £[insert amount] for you to get advice from another financial adviser if you want to. This is because [delete as applicable: you are not currently getting advice, and you may decide you now want advice / your current advice arrangement with us is more expensive than the amount allocated in the money we owe you, and you may want to use another adviser]. You can find out more about the level of investment costs your payment allows for in your calculation report. What should you do if you want to accept this offer? You must accept this offer by [insert Day Date Month Year – 3 months from date of this letter]. If you want to accept this offer, please [confirm/sign below/etc.]. We will arrange for you to receive the money we owe you through the method you chose, within 28 days of receiving your acceptance. We will also calculate how the money we owe you would be expected to grow in the period between the date it was calculated and the date you receive it. This amount will be added to your payment. You do not have to accept this offer, but if you want to, you must respond by [insert date – 3 months from date of this letter], unless there are exceptional circumstances. If we do not pay or contact you within 28 days of receiving your acceptance, you can contact the FCA using the details below. [Optional wording] If you accept this payment, it will be in full and final settlement of all claims against [me/us/name of firm which provided the advice] for the advice given by [me/us/it] to you to invest in the above-named fund. [All letters] If you are unhappy with this outcome, you should contact the Financial Ombudsman Service

FCA 2022/43 within 6 months of the date of this letter. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about the result of our calculation at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme. You can contact the Financial Ombudsman Service by:

telephone: 0800 023 4567 or 0300 123 9123; or
email: BSPS@financial-ombudsman.org.uk.
You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the FCA you can:
call its Consumer Helpline on 0800 098 4100; or
email consumer.enquiries@fca.org.uk.
If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. If you have any questions about the offer or this letter, you can phone or email us [insert contact details]. We are available between [insert contact hours]. Yours sincerely, <signature> <name of adviser or customer service> Enclosures as applicable:

Settlement form
Payment into a pension form
Summary calculator report
Pre-paid envelope
FAQs
Financial Ombudsman Service leaflet and bespoke referral form

FCA 2022/43
Settlement form
[Insert firm file reference for the offer]
Method of payment
[I/We] have enclosed 2 copies of this settlement form.
If you would like to accept this offer:
1) Tick the box next to your preferred payment method on 1 copy of the letter;
2) Complete any required fields;
3) Sign and print your name; and
4) Send the completed letter to [me/us] by [date].
5) Keep your letter and 1 copy of the settlement form for your records. On the settlement
form you keep, you should mark which choice you selected.
CONFIRMATION OF ACCEPTANCE OF OFFER AND PAYMENT METHOD In accepting this offer of payment and indicating my preferred method of payment, I am communicating a demand for payment and/or assertion of a right to payment from you and/or making a complaint to you. [If method of payment is augmentation] I would like:
£[insert amount] to be paid into my current pension by [name of the firm]. Or:
£[insert amount] to be paid to me as a lump sum, and I will arrange payment into my pension with my adviser or pension provider. Or:
£[insert amount] to be paid to me as a lump sum, and I do NOT want the payment to be added to my pension. [Where method of payment is part augmentation, part lump sum] I would like:

FCA 2022/43
£[insert amount] to be paid into my current pension by [name of firm] and £[insert amount] to be paid to me as a lump sum. Or:
£[insert amount] to be paid to me as a lump sum, and I will arrange payment into my pension with my adviser or pension provider. Or:
£[insert amount] to be paid to me as a lump sum, and I do NOT want the payment to be added to my pension. [Where offer on a lump sum basis only] £[insert amount] to be paid as a lump sum. [All letters] Where money is paid to me, I would like to receive the payment:
By cheque
By payment into bank account
Sort code: ________________ Account number: ___________________ Print name: _______________________ Signed:

FCA 2022/43
Payment into a pension
[Insert file reference]

I would like [name of firm] to calculate how much of the money they owe me can
be paid into my pension
[Where consumer will be arranging payment into their pension directly with their pension provider or third-party adviser] If you select this option, you should contact your pension provider or adviser as soon as possible to let them know you are planning on paying some money into your pension, and what steps you should take to do so.
I am NOT interested in having my payment paid into my pension
Name:___________________
Signed:__________________
Date:____________________

FCA 2022/43
FAQs

What is redress for unsuitable DB pension transfer advice and what should I do with
my payment?
We must provide a payment if we gave you unsuitable advice to transfer out of your defined benefit (DB) or ‘final salary’ pension scheme and you have lost out as a result. The payment aims to put you back in the financial position you would have been in if we had given you suitable advice and you had stayed in your DB scheme. You should invest the payment in a personal pension – usually the one that you moved your DB pension funds into when you transferred out. The aim is that the topped-up pension grows to an amount that allows you to buy an annuity which provides a guaranteed income when you retire. The aim is that this income will be similar to what you would have received from your original DB scheme on retirement. The FCA calculation rules expect your payment to grow to the amount you will need if it is invested prudently, and if the amount you pay for your investment costs are covered by your payment. The information about the investment growth and investment costs is included in your calculation report. You can use this information to decide how to invest your payment or check with your adviser or pension provider. You do not have to buy an annuity, but it is the best way to get a guaranteed lifetime income, similar to the benefits from your DB scheme. So this is what the redress calculation assumes you will do.
How do I accept the offer?
If you would like to accept the offer, please sign and return the attached form by the date given in the letter.
Can I negotiate the offer?
No. The offer is not negotiable. We have calculated the amount based on FCA rules and guidance.
Do I have to accept the offer?
No. You do not have to accept the offer if you do not want to do so. If you have any questions about the offer, you can contact us.
How did you calculate the amount of money I am owed?
We have to use the FCA’s method of calculation. This explains how we should carry out the calculation fairly. We have to use various assumptions about things like future inflation and investment returns to estimate:

in retirement, how much money you would have been given each year from your DB
pension
on retirement, what it would cost to buy an annuity that provides a guaranteed income
similar to what you would have been given from your DB pension

FCA 2022/43

what that annuity would cost in today’s money. If the cost of the annuity today is
greater than the current value of your personal pension, then we will make up the difference.

Why does the payment I receive depend on when the calculation is carried out?
The payment you receive depends on when the calculation is done and your own individual circumstances. Comparing payments – even with those who appear to be in a similar position – will not tell you whether the offer you have been given is fair. The method of calculation aims to work out how much money we should pay so that you have enough when you come to buy an annuity on retirement. This should provide a guaranteed income similar to what you would have been given from your DB scheme. The amount you will need to buy this annuity on retirement will depend on the economic situation until that time. As such, the methodology uses up-to-date, publicly available information from formal sources (including the Bank of England) about what financial markets think will happen in the future. These expectations tend to change when economic conditions change, so redress calculations done at different times can result in different payments. For example, people may be receiving lower redress payments than if their redress was calculated at a different time. One main cause may be annuities becoming cheaper (and are expected to remain so) because of changes in the economy, such as rising interest rates. If annuities are estimated to be cheaper in the future, you will likely need less money now to buy one when you retire. But if annuities were estimated to be more expensive in the future, then you would need more money to buy one when you retire. The calculation also takes account of your individual circumstances, which may be different to others. Things that can make a major difference to the calculation include your age, length of service (or date you joined your DB scheme) and what your personal pension is worth when we calculate your offer.
Should I delay accepting the offer because of changes in the economy?
The methods for calculation take into account economic changes – see question 6. You should not wait to accept your offer just because of the changes in the economy.
What should I do if I think that the offer is incorrect?
 If you have any questions about how we have calculated the offer, you can contact us. If you are unhappy with the offer, you can refer the matter to the Financial Ombudsman Service, who will consider whether we followed the scheme rules when we calculated the offer.  If you want to refer the matter to the Financial Ombudsman Service, you must do so within 6 months of the date of the original offer letter.
What should I do if I think that the information used to calculate the offer is
wrong?

FCA 2022/43
If you think the information we have used to carry out the calculation is wrong, please contact us. If you are unhappy with the offer, you can refer the matter to the Financial Ombudsman Service, who will consider whether we have followed the scheme rules when we calculated the offer.  If you want to refer the matter to the Financial Ombudsman Service, you must do so within 6 months of the date of the original offer letter.
10. If I am unhappy with the offer, can I take legal action or refer my case to the
Financial Ombudsman Service?
If you are unhappy with the offer, you can refer the matter to the Financial Ombudsman Service, who will consider whether we have followed the scheme rules when we calculated the offer.  If you want to refer the matter to the Financial Ombudsman Service, you must do so within 6 months of the date of the original offer letter.
11. What impact will accepting the offer have on my personal tax allowance or tax
liabilities?
Your payment has been calculated with the information you provided so that you should not incur any tax charges. If you are unsure how accepting the offer may affect your tax position, including whether getting your payment as a cash lump sum may create an unauthorised payment or unauthorised payment charges, you may want to contact HMRC.
12. Who can I contact if I am not sure how I would like the payment to be paid?
If you are thinking of saving or re-investing the money you may get, MoneyHelper is there to help. Backed by government, it ensures that everyone in the UK can easily access the information they need to make the right financial decisions. The service is free and impartial, and you can visit the website at www.moneyhelper.org.uk or call 0800 138 7777 for money advice, 0800 011 3797 for pension advice. You can also contact an FCA-regulated financial adviser to seek advice, but you may have to pay for this service. You may also find the FCA’s Scam Smart guidance helpful.

FCA 2022/43
Mailmerge insert to go with FCA letter to consumers where redress calculation concludes no redress/redress amount is not what the consumer expected. Details in Italics to be pre-populated.

[Customer name]
[Address 1]
[Address 2]
[Postcode]
[City]
[Email address]
[Telephone number]
Firm Name: [X] (the ‘Firm’)
Firm Reference Number: [X]
British Steel Pension Scheme Consumer Redress Scheme - Complaint to the Financial Ombudsman Service about Redress Calculation I have received a letter from my firm saying that the advice I received to transfer out of my British Steel Pension Scheme was unsuitable, but I am not owed any money. (OR (delete as applicable)) I have received a letter from my firm saying that the advice I received to transfer out of my British Steel Pension Scheme was unsuitable and that I am owed money, but I am not happy with the amount they are offering. (OR (delete as applicable)) I have received a letter from my firm saying they are calculating the money owed to me on transferring out of my British Steel Pension Scheme, but they are not able to calculate how much of that amount I can pay into my pension and/or have not included any amount for other losses I claimed. This is because they say I have not provided further information they requested. I would like my firm’s assessment to be reviewed by the Financial Ombudsman Service (FOS). I understand that FOS will contact me to set up my complaint and will request further information. Please tick:
I confirm the contact details at the top of this letter are correct; or The contact details are not correct and I have updated this information below:
Customer name: ___________________
Address 1: ___________________
Address 2: ___________________
Postcode: ___________________

FCA 2022/43
City: ___________________
Email address: ___________________
Telephone number: ___________________
How would you like FOS to contact you?
Phone Email Post
There will be times FOS need to write to you, for example, to send you the outcome of your complaint. When FOS do, would you prefer an email or letter? Email Post Have you used FOS services before? (This is so FOS can link records) Yes No Do you have any practical needs where we could help by making adjustments – like using large print, Braille or a different language? Please sign to confirm you would like the FOS to contact you to look into your complaint:
Signed:
Date:
Please return this letter to the Financial Ombudsman Service using their Freepost address at:
Freepost BSPS REDRESS SCHEME
Financial Ombudsman Service
London
E14 9SR
For information on the Financial Ombudsman Service’s privacy notice for consumers on how they use your personal information when you contact them, or bring a complaint to the Financial Ombudsman Service, please visit:

www.financial-ombudsman.org.uk/privacy-policy

FCA 2022/43
4 Annex
14R
Request for detailed calculation report
[Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus I ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme Detailed calculation report Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We have enclosed the detailed calculation report which shows all the information about you that we used to calculate the money we owe you. Check that the information about you which we used for the calculation is right. This is to make sure we are offering you the right amount. [If the comparator scheme used for the calculation provides lower redress] Pay close attention to the British Steel Pension Scheme (BSPS) scheme we used for your calculation when you check the calculation report, to make sure the money we owe you is the right amount. If the [select as appropriate: New BSPS scheme / Old BSPS scheme] had been used instead, we would owe you an extra £[enter difference between higher paying scheme and lower paying scheme]. Contact us immediately if the information in the calculation report is wrong. We wrote to you on [insert date] to say that we owe you money for the advice we gave you to transfer out of the BSPS, and you told us you would like us to send you a detailed calculation report. We have enclosed a detailed report which shows all the information about you that we used to calculate your compensation. Please carefully check that this information is right, to make sure we are offering you the right amount. If any of the information is wrong, you should contact us immediately.

FCA 2022/43
[If the comparator scheme used for the calculation provides lower redress] Pay close attention to the BSPS scheme we used for your calculation when you check the calculation report, to make sure the money we owe you is the right amount. Our information shows that if you had stayed in BSPS, you were likely to have chosen the [select as appropriate: New BSPS scheme or Old BSPS scheme] / We did not have any information to show whether you were more likely to choose the Old BSPS Scheme or New BSPS scheme if you had stayed in BSPS, so the Financial Conduct Authority (FCA)’s rules say that the New BSPS scheme should be used for your calculation. If the [select as appropriate: New BSPS scheme / Old BSPS scheme] had been used instead, we would owe you an extra £[enter difference between higher paying scheme and lower paying scheme]. If you are not happy with the amount we are offering about, you can contact the Financial Ombudsman Service or the FCA helpline. If you have any questions about the offer or this letter, you can phone or email us [insert contact details]. We are available between [insert contact hours]. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Detailed calculation report

FCA 2022/43
4 Annex
15R
Payment confirmation
[Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme Payment for unsuitable advice to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] Thank you for confirming how you would like to receive payment. We have added £[insert amount] to the amount we offered you, to cover how the money we owe you would have been expected to grow in the period between the date it was calculated and the date you receive it, if it had been invested in the way assumed within the redress calculation. [If the money is augmentation] [Select as applicable] We have arranged to pay £[insert amount] into your current pension / We have enclosed a cheque for £[insert amount] / We have paid £[insert amount] into your bank account using the details you provided. [If applicable: You should contact your current pension provider or financial adviser and arrange to pay this amount into your current pension.] This amount is broken down as follows:

£[insert amount] payment amount
Your pension provider will claim £[insert amount] tax relief from HMRC, which means
the total amount that will be added to your pension is £[insert amount]
£[insert amount] added
[If the money is part augmentation part lump sum] The rest of the money is intended to provide you with the retirement income you would have been given if you had stayed in your British Steel Pension Scheme. You should get advice on how to invest it. Pensions are designed to help support you financially in your retirement.

FCA 2022/43
Investing your payment will help improve your retirement income. If you do not invest it, you risk losing out on the extra retirement income your payment is meant to provide. The total amount is broken down as follows:

£[insert amount] payment amount
Your pension provider will claim £[insert amount] tax relief from HMRC, which means
the total amount that will be added to your pension is £[insert amount]
£[insert amount] added
[If the money is paid as a lump sum]
We have enclosed a cheque for £[insert amount] / We have paid £[insert amount] into your bank account using the details you provided. Pensions are designed to help support you financially in your retirement. This could be for a long period of time, so it is important that your pension fund lasts as long as possible. This amount is intended to provide you with the retirement income you would have been given if you had stayed in your British Steel Pension Scheme. You should get advice on how to invest it. If you do not invest it, you risk losing out on the retirement income your payment is meant to provide. The total amount is broken down as follows:
£[insert amount] payment amount
£[insert amount] added
[All letters]
We also enclose a calculation report with full details of the information we used to calculate the money we owe you, for you to keep for your records. If you have any questions about this letter, you can phone or email us [insert contact details]. We are available between [insert contact hours]. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Detailed calculator report

FCA 2022/43
4 Annex
16R
Final reminder to accept offer
[Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme FINAL REMINDER – Payment for unsuitable advice to transfer out of the British Steel Pension Scheme Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We owe you money. [Where augmentation is possible] We have calculated that the money we owe you can be added to your pension for a total amount of £[insert amount including HMRC relief] [where part augmentation, part lump sum offer], and the rest can be paid to you in a lump sum of £[insert amount]. Or, if you do not want the money we owe you added to your pension, we can pay you a lump sum of £[insert amount]. [Where lump sum offer only] We have calculated that we owe you £[insert amount]. If you would like to accept our offer, you must sign and return the attached ‘Settlement Form’ by [insert date of initial offer]. If we do not receive an acceptance from you, we cannot arrange to pay the money. This could mean that you end up with less money during your retirement than you should have had.

FCA 2022/43
If we do not hear from you by [insert offer deadline], you can still complain to us or take legal action. However, if you do not take action promptly, you may find that the time limit has passed for you to do so. If you are unhappy with our offer, you should contact the Financial Ombudsman Service within 6 months of the date of our original payment offer – [insert date of initial offer letter]. We have enclosed a referral form that you can use to refer your complaint on to them.

You can contact the Financial Ombudsman Service by telephone on 0800 023 4567 or 0300 123 9123 or by email addressed to BSPS@financial-ombudsman.org.uk.

We wrote to you on [insert date] to tell you that we owe you money for the advice we gave you to transfer out of the British Steel Pension Scheme (BSPS), and we made you a payment offer. We have enclosed 2 copies of this letter. If you want to accept this offer, please follow the instructions in our letter dated [insert date of initial offer letter]. Once we receive your acceptance, we will arrange for the payment through the method you chose within 28 days of receiving your acceptance. We will also calculate and add interest to the amount, to cover the period between the date it was calculated and the date you receive it. If you do not accept this offer, you may end up with less money in your retirement than you should have had. If you were not able to accept our offer because of personal circumstances such as bereavement or incapacity, you need to let us know and we will consider whether we can give you more time to accept the offer. You do not need to use a claims management company and, if you do, they will charge you for the service. If you are unhappy with our offer, you should contact the Financial Ombudsman Service within 6 months of the date of our original payment offer [insert date of initial offer letter]. The Financial Ombudsman Service will decide whether we have followed the rules of the scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about our payment offer at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme.

FCA 2022/43
You can contact the Financial Ombudsman Service by:

telephone: 0800 023 4567 or 0300 123 9123; or
email: BSPS@financial-ombudsman.org.uk.
You can find out more about the BSPS consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the Financial Conduct Authority (FCA), you can:
call its Consumer Helpline on 0800 098 4100; or
email consumer.enquiries@fca.org.uk.
If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. If you have any questions about the offer or this letter, you can phone or email us [insert contact details]. We are available between [insert contact hours]. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:

Copy of redress determination at 13R with enclosures

FCA 2022/43
4 Annex
17R
Redress Determination: payment acceptance not provided [Editor’s note: The letter(s) can be found at this address:
https://www.handbook.fca.org.uk/form[xxx].]
[Please delete or amend any drafting instructions in italics before sending] Rydym yn hapus i ddarparu copi o’r llythyr hwn yn y Gymraeg ar gais. Cysylltwch gyda ni ar cymraeg@fca.org.uk ac fe wnawn anfon copi atoch. [Firm details] [Date] [Consumer details] British Steel consumer redress scheme We are not able to pay you the money we owe you Dear [Insert name], [If applicable: You were introduced to our firm by [insert name of introducer firm] for advice about your British Steel Pension Scheme benefits] We are not able to pay you the money we owe you. This is because you did not accept our payment offer in our letters of [insert dates of initial letter and reminder letter]. If you are unhappy with this outcome, you should contact the Financial Ombudsman Service within 6 months of the date of our original payment offer [insert date of initial offer letter]. We have enclosed a referral form that you can use to refer your complaint on to them. You can contact the Financial Ombudsman Service by:
 telephone on 0800 023 4567 or 0300 123 9123; or  email addressed to BSPS@financial-ombudsman.org.uk Why we are not able to pay you the money we owe you We wrote to you on [insert dates of initial letter and reminder letter] to ask you how you would like us to pay you the money we owe you. We also tried to contact you [insert details] without success. What you can do next This letter does not affect your ability to complain to us or to take legal action. However, if you do not take action promptly, you may find that the time limit has passed for you do so.

FCA 2022/43
If you are unhappy with this outcome, you can contact the Financial Ombudsman Service within 6 months of the date of our original payment offer [insert date of initial offer letter]. The Financial Ombudsman Service will decide whether we have followed the rules of the consumer redress scheme correctly. We have enclosed a leaflet explaining the role of the Financial Ombudsman Service, as well as a referral form you can use to refer your complaint on to them. If you decide to complete and send this referral form on to them, they will contact you to set up and look into your complaint. Please inform us if you would like an electronic version of these documents, so that you can email a completed referral form to the Financial Ombudsman Service email address below. You can find out more information on how the Financial Ombudsman Service can help if you want to complain about our payment offer at www.financialombudsman.org.uk/consumers/complaints-can-help/pensions-annuities/transfers-fromworkplace-pensions-and-the-pensions-review/british-steel-pension-scheme. You can contact the Financial Ombudsman Service by:
 telephone: 0800 023 4567 or 0300 123 9123; or  email: BSPS@financial-ombudsman.org.uk. If you still want us to review the advice we gave you, you should make a complaint to us by [insert details on how to complain]. You can find out more about the consumer redress scheme at www.fca.org.uk/bsps. If you want to contact the Financial Conduct Authority (FCA), you can:
 call its Consumer Helpline on 0800 098 4100; or  email consumer.enquiries@fca.org.uk. If you would like to contact the FCA using next generation text relay, please call on (18001) 0207 066 1000. If you would like to contact the Financial Ombudsman Service using next generation text relay, please call on (18002) 0207 964 1000. Yours sincerely, <signature> <name of adviser or customer service> Enclosures:
Financial Ombudsman Service leaflet and bespoke referral form attached to initial offer letter

FCA 2022/43
4 Annex
18G
Summary of scheme flow diagram [CONRED 4.1.11R]

FCA 2022/43
Summary of redress scheme steps
/
What to do CONRED
Ref. When to do it
CONRED
4.1.3R
By [1 month after scheme effective date]
CONRED
4.2.2R
By [1 month after scheme effective date]
CONRED
4.2.7R and
CONRED 4
Annex
1R/2R
By [1 month after scheme effective date]
CONRED
4.2.8R and
CONRED 4
Annex 3R
Within 5 business days of consumer response CONRED 4.3.2R By [7 months after scheme effective date] Insufficient information and cannot assess suitability Sufficient information Insufficient information but can assess suitability Identify all consumers who made a BSPS pension transfer after the firm gave advice in relation to BSPS. Identify all cases which fall within the subject matter of the scheme (scheme cases) and excluded scheme cases Write to all consumers within and outside scope. Acknowledge any consumer opt-outs Complete case reviews for all non-opted-out scheme cases using the BSPS DBAAT, or an FCA DBAAT completed prior to the scheme. These must be accompanied by an attestation by the compliance senior manager.

FCA 2022/43
CONRED
4.3.5R,
CONRED
4.3.6R and
CONRED 4
Annex
4R/5R
Send chaser letter within 5 business days of consumer or third party not replying to the initial letter after 14 days. If no reply, send second letter within 5 business days of the four weeks expiring Information not provided Information provided CONRED 4.3.7R, CONRED 4.3.8R and CONRED 4
Annex 6R
By [7 months after scheme effective date]
By [7 months after scheme effective date]

‘Unsuitable’ ‘Suitable’ ‘Unsuitable’ but did not cause loss CONRED 4.3.14R, CONRED 4.3.15R and CONRED 4
Annex
8R/9R
For suitable redress determinations, notify the FCA in the first regular report which falls due after the expiry of 14 days from the date of the redress determination CONRED 4.3.14R and CONRED 4
Annex 7R
Contact consumer and/or third party with the consumer’s authority (including issuing chaser letter, and taking reasonable steps to make contact) and, if sufficient information received, complete case review Scheme case may no longer fall within subject matter of scheme, write to consumer Firm makes finding on suitability of advice Issue no loss redress determination. Notify the FCA of outcome and consumer details Issue no loss redress determination Issue letter notifying about the firm’s finding of unsuitable advice

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CONRED
4.3.14R,
CONRED
4.4.14R and
CONRED 4
Annex
10R/11R
Send initial letter requesting information at the same time as sending the redress determination (or when authority is received to write to a third party) Send chaser letter within 5 business days of the consumer or third party not replying to initial letter after 14 days. Information not provided to calculate redress Information provided with or without request to augment and/or consider other losses CONRED 4.4.18R, CONRED 4.4.19R, CONRED 4.4.20R and CONRED 4
Annex 12R
By [10 months after scheme effective date] or By [12 months after scheme effective date] where augmentation offer requested and/or a claim for other losses CONRED 4.4.2R No redress due Redress due CONRED 4.4.2R, CONRED 4.4.5R, CONRED 4.4.6R CONRED 4.4.7R, and CONRED 4 Annex 13R/14R By [10 months after scheme effective date] or By [12 months after scheme effective date], where augmentation offer requested and/or a claim for other losses Scheme case may no longer fall within subject matter of scheme, write to consumer Issue no loss redress determination Calculate lump sum redress (and, where requested by the consumer and enough information is provided on each, augmentation and/or other losses) that may be owed to consumer Issue redress determination to consumer. Ask consumer to check summary calculation report and accept offer confirming method of payment (if consumer requests full calculation report send it within 5 days of the request) Contact consumer and/or third party with the consumer’s authority (including issuing chaser letter, and taking reasonable steps to make contact) and, if sufficient information received, complete redress calculation. If consumer requests augmentation, issue a further letter and, if necessary a chaser letter, to third parties to seek necessary information.

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Offer acceptance provided
Offer acceptance not provided
CONRED
4.4.8R and
CONRED 4
Annex 16R
Send within 5 business days of the four-week deadline in the initial offer letter expiring Consumer accepts offer and confirms method of payment Consumer does not provide acceptance of the offer CONRED 4.4.9R and CONRED 4
Annex 15R
Within 28 days of consumer acceptance of the offer unless CONRED 4.4.9R(1)(b) applies CONRED 4.4.8R and CONRED 4
Annex 17R
Offer expires 3 months after date of initial offer letter, and letter to be sent to consumer within 5 days of offer expiry Payment arranged by selected method. Send payment confirmation and detailed calculator report to consumer Offer expires, write to consumer. Firm to fairly consider exceptional circumstances for paying offer beyond its validity period Send consumer a chaser letter (including taking reasonable steps to make contact) to accept offer

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4 Annex
19R
Form of Attestation for use of FCA DBAAT
I [name] of [firm] attest on [date] that:
(1) I have read the BSPS Consumer Redress Scheme rules in CONRED 4 and in particular the BSPS DBAAT instructions at CONRED 4 Annex 21R; (2) I am approved to perform the SMF16 (Compliance oversight) FCA controlled function for the firm or [another appropriate senior management function] within the firm; (3) I have reviewed the completed FCA DBAAT in light of the rules for the BSPS DBAAT referred to in (1); (4) where applicable, the completed FCA DBAAT has been amended as a consequence of applying the rules referred to in (1); (5) where the FCA DBAAT information section rating was ‘non-compliant – unclear’ or ‘non-compliant – proceed to suitability assessment’, the firm has taken the steps in CONRED 4.3.5R and has assessed the case in accordance with the rules, evidential provisions and guidance in CONRED 4.3.2R to CONRED 4.3.4R, CONRED 4.4.12G and CONRED 4.3.13G (or took equivalent steps previously); and (6) in my view, the firm would have come to the same conclusion (that the advice was suitable, unsuitable or a rating of ‘not-compliant – unclear’ (as applicable)) if it had used the BSPS DBAAT. Signed:

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4 Annex
20R
BSPS DBAAT

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Annex
21R
BSPS DBAAT and BSPS Redress Calculator Instructions 1 Introduction Limitation on use
1.1 G The suitability assessment toolkit reproduced at CONRED 4 Annex 20R
(referred to in these instructions as the ‘BSPS DBAAT’) and instructions in this Annex are to be used only for the purpose of complying with the requirements under CONRED 4 to assess pension transfer advice provided to BSPS members during the relevant period. They should not be used for any other purpose.
1.2 G Unless otherwise stated, nothing in CONRED 4 affects how the FCA DBAAT
operates.
Definitions
1.3 R In this section we use the following definitions:
(1) ‘assessor’ means the person filling in the BSPS DBAAT, either at the firm or on behalf of the firm; (2) ‘available evidence’ means the information collected by the firm and held on the consumer file or information received from a consumer; (3) ‘BSPS’ has the meaning in CONRED 4.1.1R(1); (4) ‘BSPS2’ has the meaning in CONRED 4.1.1R(2); (5) ‘BSPS DBAAT’ has the meaning in CONRED 4.1.1R(4); (6) ‘Causation Section’ is the tab on the BSPS DBAAT Excel Spreadsheet that records whether the firm’s failure to comply with the suitability requirements is the effective cause of the consumer’s loss; (7) ‘comparator scheme’ means, other than as provided by CONRED 4
Annex 21 13.1R(4):
(a) (if the advice was given on or before 16 May 2017) BSPS; (b) (if the advice was given from 17 May 2017 to 11 October 2017) either or both of BSPS and PPF; and (c) (if the advice was given on or after 12 October 2017) BSPS2 and PPF;

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(8) ‘FCA DBAAT’ has the meaning in CONRED 4.1.1R(11); (9) ‘information requirements’ are the requirements in force during the relevant period and are:
(a) COBS 9.2.1R(2);
(b) COBS 9.2.2R;
(c) COBS 9.2.3R;
(d) COBS 9.2.6R; and
(e) COBS 19.1.2R;
(10) ‘instructions’ means this Annex;
(11) ‘Information Section’ is the tab on the BSPS DBAAT Excel Spreadsheet that collects information about the firm’s compliance with the information requirements that is relevant to the assessment of suitability; (12) ‘material information gap’ has the meaning in CONRED 4.1.1R(12); (13) ‘NRD’ is the normal retirement date in the comparator scheme; (14) ‘pension benefits’ has the meaning in CONRED 4.1.1R(13); (15) ‘PPF’ means the Pension Protection Fund; (16) ‘relevant period’ is defined at CONRED 4.1.1R(16); (17) ‘scheme case’ is defined at CONRED 4.1.1(17); (18) ‘suitability requirements’ are the requirements in force during the relevant period specified at CONRED 4 Annex 21R 7.1R and are:
(a) COBS 9.2.1R(1); and
(b) the common law duty in contract or tort to exercise reasonable skill and care in advising the consumer on pension transfers; and that were in force during the relevant period and applicable to a scheme case; (19) ‘Suitability Section’ is the tab on the BSPS DBAAT Excel Spreadsheet that records the assessment of the firm’s compliance with the suitability requirements; (20) ‘transfer value’ is the cash equivalent transfer value or CETV;

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(21) ‘transfer value analysis’ is the analysis a firm was required to carry out during the relevant period, in accordance with the requirements at COBS 19.1.2R; and (22) ‘two-adviser model’ has the meaning in CONRED 4.1.1R(21). 2 Using the BSPS DBAAT
2.1 G The BSPS DBAAT contains factors for the firm’s assessor to take into account
to determine whether there has been a failure to comply with the suitability requirements in a scheme case. The instructions are addressed to the assessor carrying out the review.
2.2 R The BSPS DBAAT is a Microsoft Excel workbook divided into 5 ‘sections’,
using worksheet tabs, which must be completed in full except where indicated in these instructions.
2.3 R Before completing the BSPS DBAAT, an assessor must familiarise themself
with the features, benefits and risks of a pension transfer from BSPS, including the features, benefits and risks in general of a pension transfer that a reasonably competent firm should have identified, as illustrated in CONRED 4
Annex 22G at Table 1.
2.4 R The assessor must answer the questions in the BSPS DBAAT and complete
the assessment by reference to the available evidence, and where specified the information available to advisers during the relevant period listed in CONRED 4 Annex 22G at Tables 2 and 3.
2.5 R All answers should be based on information obtained up until the date the firm
gave the advice or arranged the pension transfer, unless otherwise stated.
2.6 G When completing the BSPS DBAAT, an assessor should ensure that the
information they enter, including, without limitation, all values, notes, additional comments, rationale and evidence, is sufficiently detailed for a third-party assessor to:
(1) gain an accurate and complete overview of the relevant evidence on the consumer file; and (2) form a view without the need to refer to the relevant evidence as to whether the firm has collected the necessary information to assess suitability and, where applicable, complied with the suitability requirements.
2.7 G The BSPS DBAAT uses colours to indicate whether fields have been
completed. Blue indicates fields still to complete. Grey indicates fields that may not have to be completed, depending on the answer to a question.
2.8 G The diagram at 2.9G explains the scheme steps in diagrammatic form, with
reference to the relevant sections of the instructions and CONRED 4 rules.

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2.9 G The steps to complete a BSPS DBAAT are set out below.

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Steps to complete a BSPS DBAAT
Note this diagram should be considered alongside other scheme diagrams Using the available evidence: CONRED Reference CONRED 4 Annex 21R Instruction 5.1R CONRED 4 Annex 21R Instruction 5.1R No Yes (compliant) CONRED 4 Annex 21R Instruction 5.1R and CONRED 4.3.5R No further information provided, or further information provided but does not address all information gaps Further information provided which addresses all gaps (compliant) CONRED 4.3.5R, 4.3.6R, 4.3.7R and CONRED 4 Annex 21R Instructions 5.1R, 5.2G and 6 ‘NCEIAS’ = not compliant but enough information to assess suitability (see Instructions 5.5R and 5.6G) CONRED 4.3.2R Material Information Gap (not compliant) Yes (NCEIAS) CONRED 4.3.7R, CONRED 4.3.8R and CONRED 4 Annex 21R Instruction 5.7R Make a record of the relevant information in the 9 areas in the Information Section Decide whether the firm complied with information requirements/obtained necessary information to assess suitability Contact consumer (taking all reasonable steps to make contact), to obtain missing information (issuing a chaser letter if no reply) Decide whether there is nonetheless sufficient information to assess suitability Senior manager at firm to complete attestation tab, signed by an SMF16 (Compliance Oversight) or other approved SMF Senior manager at firm to complete attestation tab, signed by an SMF16 (Compliance Oversight) or other approved SMF Out of scope. Write to consumer and make record

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CONRED 4.3.2R and
CONRED 4 Annex
21R Instructions 9 and 10
Unsuitable (not compliant with COBS 9.2.1R(1)) Suitable (compliant with COBS 9.2.1R(1)) CONRED 4.3.2R, CONRED 4.3.14R and CONRED 4 Annex 21R Instructions 11 and 12 No Yes CONRED 4.4 and CONRED 4 Annex 21R Instructions 12 Assess suitability of the personal recommendation. (Are any of the 12 examples present?) Answer causation question in Causation Section Senior manager at firm to complete attestation tab, signed by an SMF16 (Compliance Oversight) or other approved SMF Redress determination (no loss) Senior manager at firm to complete attestation tab, signed by an SMF16 (Compliance Oversight) or other approved SMF Redress determination (no loss) Redress calculation and redress determination

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3 Use of FCA DBAAT
3.1 G If CONRED 4.3.2R(2) applies and the firm uses a non-BSPS DBAAT to
complete the first step under CONRED 4.3.2R, it should have regard to the differences between the BSPS and non-BSPS DBAAT and refer to relevant sections of the instructions to identify whether their FCA DBAAT or assessment requires amendment. The material changes include:
(1) In the Information Section:
(a) Information Area 4 is not present in the BSPS DBAAT and the remaining Information Areas have been renumbered; (b) Information Area 7 in the BSPS DBAAT on the comparator scheme (area 8 in the non-BSPS DBAAT) has been significantly revised; (c) Information Area 9 in the BSPS DBAAT on the transfer analysis (area 10 in non-BSPS DBAT) has been significantly revised. (2) In the Suitability Section:
(a) the addition of evidential provisions in respect of Examples 1 to 11; (b) new Example 11 has been inserted in the BSPS DBAAT; (c) Example 11 from the non-BSPS DBAAT becomes Example 12; (d) Example 12 from the non-BSPS DBAAT has been removed. (3) The Suitability Investment Advice, Disclosure and Insistent Client Sections have been removed. 4 General instructions
4.1 R An assessor must complete a separate BSPS DBAAT for each consumer and:
(1) if the consumer has more than one period of service in the BSPS, complete a separate BSPS DBAAT for each period of service; (2) if the consumer received connected advice on pension transfers from a non-BSPS ceding arrangement within 6 months of the BSPS advice, have regard to how the connected advice factors into the advice to transfer the consumer’s BSPS scheme.
4.2 G For the purpose of 4.1R, advice on a pension transfer from a non-BSPS
ceding arrangement is likely to be connected with advice to transfer from

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BSPS if the advice on the other scheme is integral to the consumer’s decision to transfer from the BSPS.
4.3 R Where the consumer is married or has a partner, complete the BSPS DBAAT
on a joint life basis unless the consumer has instructed the firm to advise on a single life basis and their spouse or partner has confirmed that they have sufficient retirement provision of their own.
4.4 R Where it is necessary to use multiple BSPS DBAATs:
(1) use the first BSPS DBAAT for the ceding arrangement offering the largest transfer value; (2) label the completed BSPS DBAATs with the consumer’s name and the number in sequence order that the BSPS DBAATs were completed; (3) re-use the relevant information from the first BSPS DBAAT in any connected BSPS DBAATs and ensure that the following sections are completed using the available evidence about the consumer and the ceding arrangement the BSPS DBAAT relates to:
(a) case details;
(b) Information Area 1 – ‘has the firm obtained the essential facts about the consumer?’; (c) Information Area 7 – ‘has the firm obtained the necessary information about the consumer’s pension benefits?’; (d) Information Area 8 – ‘has the firm obtained necessary information regarding the proposed arrangement?’; and (e) Information Area 9 – ‘has the firm carried out the transfer analysis?’; and (4) clearly cross refer between the BSPS DBAATs. 5 Information Section
5.1 R An assessor must take these 6 actions to complete the Information Section:
(1) Enter ‘case details’ of the file review and assessor alongside details of the firm, adviser and pension transfer specialist (as recorded on the Financial Services Register) and the charging basis for the advice. (2) Record the relevant information from the available evidence under each of the 9 Information Areas, following the instructions under each area heading. (3) For each Information Area, decide whether the firm has complied with the information requirements and obtained the necessary information to assess suitability and answer ‘yes’ or ‘no’ to each ‘area question’.

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(4) Depending on the answers to questions in Information Areas 1 to 9, the BSPS DBAAT will give the firm’s information collection 1 of 3 indicative ratings. To complete this action, refer to the instructions at CONRED 4 Annex 21R from 5.3R to 5.7R and select from the dropdown list one of the following ‘assessor’ ratings:
(a) ‘Compliant – Proceed to suitability assessment’ – the firm has complied with the information requirements and collected the necessary information to assess suitability. Proceed to the Suitability Section of the BSPS DBAAT. (b) ‘Non-compliant – Material Information Gap’ – the firm has not complied with the information requirements and so it is not possible to assess suitability. Complete action (5) before finalising this rating. (c) ‘Non-compliant - However enough information to assess suitability’ – the firm has not complied with the information requirements and has taken the steps at CONRED 4.3.5R but there is sufficient information to conclude that the advice was likely to be unsuitable. Proceed to the Suitability Section of the BSPS DBAAT. (5) If 4(b) applies, follow the steps in CONRED 4.3.5R to obtain the missing information, then carry out actions 5.1R(2) to (4) again and finalise the assessor rating. (6) Explain, with reference to the consumer file, the reasons for the rating and any actions taken to obtain missing information.
5.2 G The overall assessment part of the Information Section has 2 boxes:
(1) Tool rating: the BSPS DBAAT’s indicative rating of whether the firm has obtained the ‘necessary information’ to make a personal recommendation based on the answers to Information Area questions 1 to 9 in the Information Section. (2) Assessor rating: this is the assessor’s own informed assessment in the round of whether the firm has obtained the necessary information to make a personal recommendation. The assessor can come to a different rating.
5.3 R To complete the overall assessment of whether the firm has collected the
necessary information at 5.1R(4), take the following steps. Using the available evidence and with reference to the information requirements:
(1) review the information recorded and the ratings in each Information Area of the BSPS DBAAT; (2) answer ‘yes’ or ‘no’ depending on whether the firm has complied with the information requirements; and

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(3) insert commentary on whether or not the firm has complied with the information requirements.
5.4 R If the answer to all of the Information Area questions 1 to 9 is ‘yes’, select
‘compliant – proceed to suitability section’ and proceed to the Suitability
Section.
5.5 R If one or more of the answers to the Information Area questions 1 to 9 is ‘no’,
decide, with reference to the information requirements, whether there is nonetheless sufficient information to assess the suitability of the recommendation and:
(1) if there is sufficient information, select ‘non-compliant however enough information to assess suitability’ and make a record of the reasons for the assessment in accordance with CONRED 4 Annex 21R 5.3(3)R; or (2) if there is not sufficient information, select ‘Non-compliant - Material Information Gap’ and take the second step at CONRED 4.3.5R to obtain the missing information then proceed to 5.1R(2).
5.6 G There may be sufficient information to assess the suitability of the advice in
circumstances where the firm has been unable to obtain the necessary information in one or more Information Area. For example:
(1) where the consumer was in serious financial difficulty and had a proven urgent need for the transferred funds and the firm was unable to obtain the necessary information in Information Area 1, 3, 4 or 5. The types of circumstances in which a consumer is likely to be able to show they are experiencing serious financial difficulty include where continuing to pay domestic bills and credit commitments is a heavy burden on the consumer and the consumer has missed payments for any credit commitments and/or any domestic bills in any 3 or more of the last 6 months; or (2) where the consumer was in ill health, with death expected imminently, and wanted to transfer in order to pass the value of their pension benefits to beneficiaries and the firm was unable to obtain the necessary information in Information Area 3, 4, 5, or 6.
5.7 R If, after taking the steps at CONRED 4.3.5R, and having regard to the
guidance in CONRED 4.3.12G to CONRED 4.3.13G, the conclusion is that the firm has not obtained the necessary information and it is not possible to assess the suitability of the transfer (such that the ‘assessor rating’ is ‘Non-compliant – Material Information Gap’), record:
(1) a brief summary of the missing information and its significance to the suitability assessment (for example, ‘the firm has not recorded any consumer objectives and so it cannot form a view on whether the transfer meets the consumer’s investment objectives’); and

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(2) that the firm has not complied with the information requirements but it is not possible to assess whether the firm has complied with the suitability requirements; and (3) where the failure relates to the transfer analysis, that the firm has not carried out the required transfer analysis in accordance with COBS 19.1.2R. 6 Instructions for Information Areas
6.1 G This section sets out how to assess whether the firm has collected the
necessary information across 9 Information Areas to make a personal recommendation. It is also to be used to determine whether the assessor has sufficient information to assess suitability. Information Area 1: has the firm obtained the essential facts about the consumer?
6.2 R Refer to the available evidence and take the following steps:
(1) Select ‘yes’ or ‘no’ depending on whether the firm has obtained the essential facts about the consumer. (2) Enter the information about the consumer and (if relevant) their spouse or partner from the available evidence. (3) Record any information inferred from the available evidence in the comment box.
6.3 R Complete the BSPS DBAAT as follows:
(1) Where advice is on a joint life basis, complete the essential information for the consumer and their partner. (2) If the consumer’s tax rate is not recorded, it can be inferred from the consumer’s salary at the date of the advice. (3) Record in the additional comments box whether the consumer intends to transfer the pension to a Qualifying Recognised Overseas Pension Scheme. Record the relevant currency and overseas tax rates. (4) Where health status is not recorded, absent any evidence suggesting otherwise, infer that the consumer is in good health. (5) Record details about any dependants and the consumer’s responsibility for them. (6) Include details about whether the consumer had characteristics of vulnerability. This means someone who, due to their personal circumstances, is especially susceptible to detriment.

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Information Area 2: has the firm obtained the necessary information regarding the consumer’s objectives?
6.4 R Take the following steps to complete this area. Using the available evidence,
identify the information recorded on the consumer’s objectives and:
(1) if no objectives have been recorded, answer ‘no’ to this question; or (2) if objectives are recorded, answer ‘yes’; and (3) complete the BSPS DBAAT by recording the consumer’s objectives, using the same wording and ranking or prioritisation as the firm and include any observations in the additional comments box.
6.5 G For each objective identified, the BSPS DBAAT will indicate fields where
further information can be recorded, in the right-hand columns, relating to:
(1) the amount wanted (to achieve the objective); and (2) the date the amount is needed. Information Area 3: has the firm obtained the necessary information regarding the consumer’s preferences regarding risk taking and their risk profile?
6.6 R Take the following steps to complete this area. Using the available evidence:
(1) select ‘yes’ or ‘no’ depending on whether the firm has obtained the necessary information about the consumer’s preferences regarding risk taking and their risk profile; (2) record in the boxes provided the firm’s description of the consumer’s:
(a) attitude to investment risk;
(b) attitude to the risks associated with a pension transfer, including the loss of safeguarded benefits; (c) capacity for loss (in general); and (d) capacity for loss of safeguarded benefits; (3) select ‘yes’ or ‘no’ depending on whether the firm used a tool for any of the above assessments. If the firm used a tool record the name of that tool in the ‘name of tool’ box; and (4) record in the ‘comments’ box any additional comments or observations on the firm’s approach to obtaining this information.
6.7 G ‘Capacity for loss’ refers to the consumer’s ability to absorb falls in the value
of their investment. If any loss of capital would have a materially detrimental effect on their standard of living, this should be taken into account in assessing the risk that they are able to take.

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6.8 G COBS 9.2.2R(2) requires a firm to obtain, where relevant, information about
the consumer’s (a) preferences regarding risk taking and (b) risk profile. COBS 19.1.7G and COBS 19.1.7AG contain guidance to which a firm giving pension transfer advice should have had regard when identifying the consumer’s risk preferences and risk profile.
6.9 G A firm advising a consumer during the relevant period should have obtained
sufficient information to enable it to consider the consumer’s attitude to the investment risks specific to a pension transfer, including:
(1) the rate of growth that would have to be achieved to replicate scheme benefits in the proposed arrangement (COBS 19.1.7G and COBS 19.1.7AG); (2) the extent to which benefits may fall short of replicating those in the defined benefits pension scheme or other scheme with safeguarded benefits (COBS 19.1.7AG(1)); (3) the uncertainty of the level of benefit that can be obtained from the purchase of a future pension annuity and the investment risk to which the retail consumer is exposed until a pension annuity is purchased with the proceeds of the proposed personal pension scheme or stakeholder pension scheme (COBS 19.1.7AG(2)); (4) the potential lack of availability of pension annuity types (for instance, pension annuity increases linked to different indices) to replicate the benefits being given up in the defined benefits pension scheme as set out in COBS 19.1.7AG(1)); and (5) the risks relevant to a pension transfer from the BSPS to a scheme with flexible benefits listed at CONRED 4 Annex 22G at Table 1. Information Area 4: has the firm obtained the necessary information regarding the consumer’s knowledge and experience?
6.10 R Take the following steps to complete this area. Using the available evidence:
(1) identify the information relevant to the consumer’s knowledge and experience of defined benefits pension schemes and pension schemes with flexible benefits, including:
(a) the types of service, transaction and investments with which the consumer is familiar; (b) the nature, volume and frequency of the consumer’s transactions in investments and the period over which they have been carried out; and (c) the level of education, profession or relevant former profession of the consumer;

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(2) answer ‘yes’ or ‘no’ depending on whether the firm has obtained the necessary information about the consumer’s knowledge and experience; and (3) record the consumer’s knowledge and experience relevant to pension transfers in the ‘additional comments’ box. Information Area 5: has the firm obtained the necessary information regarding the consumer’s estimated expenditure?
6.11 R Take the following steps to complete this area. Using the available evidence:
(1) identify the information relevant to the consumer’s financial situation; (2) answer ‘yes’ or ‘no’ depending on whether the firm has obtained the necessary information regarding the consumer’s estimated expenditure; (3) record relevant information under the headings ‘current regular’ and ‘retirement regular’, including the consumer’s expenditure on:
(a) basic cost of living;
(b) lifestyle expenditure; and
(c) discretionary expenditure/savings; and
(4) record any additional comments about the steps the firm has taken to obtain this information, including any inferences made about current or retirement regular expenditure.
6.12 E Answer ‘yes’ to the question at 6.11R(2) if the firm has taken reasonable steps
to obtain the information under the headings ‘current regular’ and ‘retirement regular expenditure’ but there is information missing and:
(1) the consumer is 5 years or less from their intended retirement age and taking account their personal circumstances, it is possible to use the current regular expenditure as a proxy for retirement regular expenditure; or (2) it is possible to use the current regular expenditure, with consumerspecific adjustments, as a proxy for retirement regular expenditure.
6.13 G The BSPS DBAAT records the necessary information about the consumer’s
estimated expenditure throughout retirement in 3 categories:
(1) Basic cost of living: this includes all non-discretionary expenditure. For example, utility bills, council tax, food and any outstanding accommodation payments (such as mortgages and rents) or care expenses if these are ongoing.

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(2) Lifestyle expenditure: this is expenditure to support the consumer’s lifestyle. For example, consumers may wish to spend money on entertainment, holidays or home help. (3) Discretionary expenditure/savings: this is expenditure which is discretionary and could easily be cut back by the consumer at any time. It may include current savings into pensions or investments which may well cease upon retirement. This may also be labelled as ‘disposable income’.
6.14 G If the firm has estimated the consumer’s expenditure in retirement, consider
whether it took reasonable steps to do so. Reasonable steps might include:
(1) gathering the necessary information on the consumer’s current level of expenditure and liabilities; (2) considering how the consumer’s personal circumstances and lifestyle (for example, living arrangements, mortgage position, provision of financial support for dependents, recreational activities, and travel) are likely to change upon retirement, and how this might affect future expenditure and liabilities; (3) challenging low estimates of expenditure by using comparative figures derived from (for example) the firm’s experience with other consumers in similar situations, statistical averages, actuarial data and other reliable sources (though it is unlikely that the use of generic data would by itself satisfy the requirement to take reasonable steps); (4) where a firm has used a cashflow modelling tool to estimate the consumer’s level of expenditure in retirement as part of demonstrating how reliant the consumer is on this income in retirement; (5) challenging inconsistent information, for example, where the consumer suggests they have a high level of available disposable income but low levels of savings, suggesting that their lifestyle expenditure may be more than they represent. Information Area 6: has the firm obtained the necessary information regarding the consumer’s financial situation?
6.15 R To complete this area, take the following steps. Using the available evidence:
(1) identify the information relevant to the consumer’s financial situation; (2) answer ‘yes’ or ‘no’ depending on whether the firm has captured the necessary information regarding the consumer’s financial situation; and (3) record the relevant information for the consumer and (for joint advice) their spouse or partner under the headings:
(a) consumer’s current income;

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(b) income sources in retirement (excluding income from the comparator scheme, which is captured in Information Area 7); (c) other assets (excluding the consumer’s main residence); and (d) liabilities.
6.16 G The consumer’s main residence should not usually be counted as an asset
which can be used as an income source in retirement. The consumer’s main residence typically provides secure accommodation throughout retirement. Where the firm has a reasonable basis for treating the main residence as an asset, for example because the consumer has a legitimate plan to downsize and the firm has a contemporaneous record of these plans, include the value of the main residence in the ‘other assets’ box.
6.17 G If the consumer file is incomplete or it is unclear whether the firm has
collected the necessary information on the consumer’s financial situation, it may be possible to estimate the consumer’s income or assets from other information on the consumer file. For example:
(1) if the ‘other assets’ section in a fact-find is blank, and there is evidence that the consumer’s income does not exceed or marginally exceeds their expenditure, it may be reasonable to assume that the consumer has no other assets; (2) if the ‘state pension’ section of the fact-find is blank:
(a) where there is evidence of the consumer’s employment history on file or length of service at the scheme employer, it may be possible to estimate entitlement to a state pension; (b) where a consumer expects to continue in employment until retirement, it is reasonable to infer, unless there is specific information to the contrary, that the consumer would continue to accrue state pension entitlement throughout that period; (3) if details on the ‘spouse’s/partner’s’ assets are missing, it may be possible to infer information based on the spouse’s circumstances. For example:
(a) if the spouse or partner was employed at the time of the advice, it is likely they will have some eligibility for state pension; (b) if the spouse or partner was not employed, this may indicate that they have modest assets, in the absence of evidence suggesting otherwise; (4) if the consumer or their spouse or partner held other defined benefits of material value, where a benefits statement was delayed, these benefits could be reasonably estimated by contemporaneous records of their salary, length of service and publicly available scheme details;

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(5) if there is an indication that the spouse or partner has a defined contribution pension scheme or other assets but the value is not quantified, where it has already been demonstrated that the consumer and spouse or partner have sufficient other guaranteed pension provision to cover their expenditure in retirement, the value of this scheme may not be necessary to assess the suitability of the recommendation to transfer.
6.18 G (1) If the available evidence suggests that the consumer has a significant
amount of disposable income, but the firm has obtained limited or no information on them, it is more likely than not that the firm has not obtained the necessary information. (2) If the available evidence demonstrates that the consumer has other assets or liabilities, but the firm has obtained limited or no information on them, it is likely that the firm has not obtained the necessary information.
6.19 G If the consumer was concerned about the security of their employment with
Tata Steel Ltd and the security of income over the remaining term to retirement, this should have been recorded on the consumer file. The firm should have inquired as to whether redundancy or loss of income was imminent and was likely to cause significant financial hardship. Information Area 7: has the firm obtained the necessary information regarding the consumer’s pension benefits?
6.20 R To complete this area, take the following steps. Using the available evidence:
(1) (where the firm has advised on multiple periods of service in the BSPS) record under the heading ‘number of schemes’:
(a) the number of periods of service in the BSPS advised on; (b) whether the outcome was to transfer all periods of service; (2) record the relevant information for the consumer’s BSPS membership, including:
(a) the statement of benefits and date obtained; (b) whether the Time to Choose pack was obtained; (c) what the consumer’s Time to Choose election was (BSPS2 or PPF); (d) the date of the CETV and the CETV amount; (e) the dates they joined and left the BSPS (the BSPS DBAAT will then automatically calculate the length of service);

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(f) their retirement date (NRD) in the BSPS; (g) BSPS minimum retirement age; (h) whether the client opted out of the scheme in advance of its closure and the date of any opt-out; (i) any additional comments; (3) answer ‘yes’ or ‘no’ depending on whether the firm has captured the necessary information regarding the consumer’s BSPS membership, Time to Choose election, and benefits; and (4) record any comments relevant to the consumer’s CETV and the comparator scheme(s) in the ‘additional comments’ box. Information Area 8: has the firm obtained the necessary information regarding the proposed arrangement?
6.21 R To complete this area, take the following steps. Using the available evidence:
(1) identify information about the proposed arrangement; (2) answer ‘yes’ or ‘no’ depending on whether the firm has captured the necessary information regarding the proposed arrangement; (3) if the firm has not identified a proposed arrangement, answer ‘no’ to this question; (4) record the relevant information under the headings ‘proposed arrangement’; and (5) in the ‘additional comments’ box, record any relevant information about product and adviser costs and charges. Information Area 9: has the firm carried out the transfer analysis?
6.22 R To complete this area, take the following steps. For the relevant comparator
scheme(s), using the available evidence and with reference to the firm’s transfer value analysis:
(1) record the consumer’s preferred retirement age; (2) record the relevant comparator schemes(s); (3) record relevant information under the heading ‘comparison of benefits’ from the comparison carried out by the firm to comply with COBS 19.1.2R; and (4) record relevant information under the heading ‘critical yield’, including:

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(a) the critical yield on a joint and single basis to the consumer’s NRD and preferred retirement date; and (b) identify which critical yield is more relevant (joint or single) by selecting the critical yield which corresponds to the consumer’s intentions; and (i) if the evidence on file demonstrates that the consumer does not intend to take any pension commencement lump sum, record the critical yield for a full pension and make a note in the ‘additional comments’ box; and/or (ii) if the consumer is single and there is nothing on file to suggest that this is likely to change, then insert the critical yield calculated on a single life basis and make a note in the ‘additional comments’ box; and (c) record the critical yield to match the comparator scheme(s) at the consumer’s preferred retirement date; and (5) record commentary on any other comparison of benefits, for example on cashflow modelling or analysis of how long funds are likely to last in the proposed arrangement.
6.23 G The BSPS DBAAT records the necessary information about the consumer’s
benefits at the comparator scheme(s) and their preferred retirement date in 3 categories:
(1) Pension (no commutation) per annum (p.a.): the income benefits the consumer would receive at NRD if they were to take all their benefits as income only. (2) Pension (full commutation) per annum (p.a.): the (reduced) income benefits the consumer would receive at NRD if they chose to maximise their pension commencement lump sum by commuting income benefits up to the full permitted limit. (3) Pension commencement lump sum (PCLS): the lump sum benefits the consumer would receive at their NRD if they chose to maximise their PCLS by commuting income benefits up to the full permitted limit.
6.24 G To assess whether the firm has carried out the transfer analysis, identify
whether:
(1) (with reference to the assumptions in COBS 19.1.4R to COBS 19.1.4BR and taking into account the dates these rules were in force) the analysis has been undertaken on the correct assumptions, including whether, if more cautious assumptions have been used, those assumptions are reasonable; and

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(2) the analysis is consistent with product-related documents such as the key features illustration. 7 Suitability requirements
7.1 R The following requirements are specified as ‘suitability requirements’:
(1) COBS 9.2.1R(1), which requires a firm to take reasonable steps to ensure that a personal recommendation is suitable for its client; and (2) the common law duty in contract or tort to exercise reasonable skill and care in advising the consumer on pension transfers.
7.2 G The contract between the firm and the consumer may have included a specific
term providing that the firm would exercise reasonable skill and care in advising the consumer on investments. If it did not do so, such a duty is likely to have been implied into the contract.
7.3 G The standard of care under the FCA rules and the common law is that of a
reasonably competent firm carrying on a similar business to that of the firm assessed.
7.4 G The suitability requirements arise from FCA rules and the common law. For
the requirements specified, the standards required of the firm are materially similar, regardless of whether their origin is a rule or the common law.
7.5 G COBS 9.2.1R(2), COBS 9.2.2R and COBS 9.2.3R indicate matters of which a
firm must take account when assessing whether the firm failed to comply with the suitability requirements. In summary, these are the consumer’s:
(1) investment objectives;
(2) financial situation; and
(3) knowledge and experience in the investment field relevant to the specific type of designated investment or service.
7.6 G The starting point for pension transfer advice is the guidance in COBS
19.1.6G that a firm should only consider a transfer, conversion or opt-out to be suitable if it can clearly demonstrate, on contemporary evidence, that the transfer, conversion or opt-out is in the client’s best interests. 8 Assessing scheme cases for compliance with suitability requirements
8.1 R (1) The ‘Suitability Section’ in the BSPS DBAAT and associated
additional provisions in these instructions contain ‘examples’ which tend to show failure to comply or compliance with the suitability requirements specified at 7.1R.

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(2) The examples are indicators that advice may be unsuitable, and an overall view of suitability or unsuitability must be reached taking account of all of the circumstances.
8.2 R For each scheme case, the assessor must:
(1) fairly consider and give appropriate weight to all available evidence of the firm’s compliance or non-compliance with applicable suitability requirements; and (2) decide, including with reference to the examples in the BSPS DBAAT, whether it is more likely than not that the firm complied or failed to comply with the suitability requirements.
8.3 R In considering the available evidence, the assessor must:
(1) not assume that a firm complied with a suitability requirement solely on the basis that:
(a) the consumer signed documentation that records their understanding or agreement to matters set out in that documentation; (b) the advice was given to a consumer who had transferred from a defined benefit occupational pension scheme in the past; (2) give more weight to evidence of the consumer’s particular circumstances or the circumstances at the time than to general evidence of the selling practices of the firm or its advisers at the relevant time; (3) determine that an example is present on the ‘balance of probabilities’ when it is more likely than not to have occurred.
8.4 R When assessing whether a firm complied with the suitability requirements, the
assessor must take into account the following:
(1) the consumer’s investment objectives, including their willingness to bear the risks associated with transfer (transfer risk); (2) the consumer’s financial situation, including their ability, financially, to bear the risks associated with the recommended transfer consistent with their investment objectives; (3) the consumer’s ability, in the light of the following, to understand the risks associated with a pension transfer:
(a) the experience and knowledge of the consumer relevant to a pension transfer; and (b) any communications received from the comparator scheme(s) regarding the pension transfer.

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8.5 R When assessing the reasonableness of a firm’s conduct, the assessor must:
(1) assess the firm’s conduct against what was reasonable at the time when the firm gave the advice; and (2) have regard to the information available at various times, including the information listed at Table 3 of CONRED 4 Annex 22G; and (3) conclude that the conduct of the firm assessed was reasonable only where that firm displayed the degree of skill, care and diligence that would at that time have been exercised in the ordinary and proper course of a similar business to that of the firm.
8.6 G Where the advice is given using a two-adviser model and the advisers are
employed by different firms:
(1) identify which firm is responsible for the pension transfer advice and which firm is responsible for the investment advice; (2) take into account that it will generally be reasonable for the firm providing pension transfer advice to rely on information provided to it in writing by the firm providing investment advice, unless it is aware or ought reasonably to be aware of any fact that would give reasonable grounds to question the accuracy of that information (COBS 2.4.6R and COBS 2.4.8G). 9 Completing the Suitability Section of the BSPS DBAAT
9.1 G The Suitability Section is used to record the assessment of whether the firm
has complied with the suitability requirements.
9.2 R The assessor must take the following steps to complete the Suitability Section:
(1) review the available evidence and the information recorded in the Information Section of the BSPS DBAAT; (2) take the steps in Section 10 of this Annex to determine whether the available evidence shows overall that an example is present, or not; (3) indicate whether any or all of Examples (1) to (12) are present, or not, by selecting ‘yes’ or ‘no’; (4) conclude, taking into account all of the available evidence and the presence of any examples indicating unsuitable advice, whether the firm complied with the suitability requirements; and (5) comment on whether or not the firm complied with the suitability requirements, with reference to the example or examples that support their conclusion.
9.3 G If an example is present, this will tend to indicate the firm’s potential noncompliance with the suitability requirements. There may be other factors

FCA 2022/43 which mean that the firm has, despite the presence of the example, complied, or not complied, with the suitability requirements. For example:
(1) if Example 9 is present because the transfer analysis does not support a recommendation to transfer, but the recommendation is nonetheless suitable because the consumer has little or no reliance on the transfer value from the comparator scheme and no requirement to replicate the amount or shape of the comparator scheme benefits; or (2) if Example 1 is present but the recommendation is nonetheless suitable because the consumer is in serious ill health with a shortened life expectancy and:
(a) the consumer’s objective is to transfer to preserve the value of their scheme benefits for beneficiaries; and (b) the beneficiaries would be financially better off if the funds were transferred to a scheme with flexible benefits rather than remaining in the comparator scheme(s).
9.4 G The BSPS DBAAT rating will indicate a conclusion of ‘Compliant’ or ‘NonCompliant’ based on the answer to the example questions in the BSPS
DBAAT. The BSPS DBAAT rating is not definitive of suitability; it is an indication of the firm’s compliance with the suitability requirements. 10 Examples that indicate unsuitable advice
10.1 G This section contains rules, evidential provisions, and guidance for
determining whether the available evidence shows overall that an example is present, or not. Example 1: the consumer is, or will be, reliant on income from the comparator scheme
10.2 R Take the following steps to determine whether this example is present:
(1) Review the available evidence in Information Areas 5, 6, 7, 8 and 9 of the Information Section. (2) Using the available evidence, identify the amount the consumer needs to meet anticipated expenses and personal outlays throughout retirement, taking into account:
(a) any forecast expenditure plans that the firm has identified with the consumer; (b) any intention or preference for early retirement; (c) any existing liabilities that the consumer continues to pay off (for example, their mortgage) and their plans for clearing these debts;

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(d) whether the forecast expenditure appears reasonable in light of their current expenditure patterns and plans to pay off liabilities; and (e) where the firm has not collected a forecast expenditure plan, an estimate (if possible) of the consumer’s likely expenditure patterns based on the information on file. (3) Using the available evidence, identify the anticipated income from the comparator scheme at NRD or the consumer’s preferred retirement date, whichever is earlier. Where the consumer wishes to retire early, assess whether the consumer can afford to retire early or whether this will give rise to or increase the risk of the consumer running out of income in retirement. (4) Assess how the income from the comparator scheme, including inflationary increases, contributes to the consumer’s income needs in (2). (5) Assess whether the consumer can produce the same or similar contribution towards their planned expenditure needs throughout retirement (using a range of possible life expectancies) as identified in (2) using the available assets, including from:
(a) contribution-based pension schemes, including the proposed arrangement, taking into account the impact of the following factors on the sustainability of these schemes throughout retirement:
(i) the frequency of withdrawals (ad hoc or regular payments); (ii) the timing of withdrawals (monthly, yearly); (iii) the amount of the withdrawals; and (iv) investment performance; (b) savings and investments; (c) other pension schemes with safeguarded benefits; (d) (if the consumer is eligible) state pension; (e) (if the consumer is managing income on a joint basis) the spouse’s/partner’s other assets, pensions and entitlement to the state pension, and how this contributes to their total household income. (6) Using the assessments in 10.2R(4)-(5) decide (yes or no) whether:

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(a) the consumer can produce the same or similar contribution towards their income needs, as identified in 10.2R(2), from the proposed arrangement; and (b) the consumer has the requisite capacity for loss, taking into account the impact of the factors considered at 10.2R(5)(a) on the sustainability of the proposed arrangement.
10.3 E (1) If the answer to 10.2R(6)(a) and (b) is ‘yes’, conclude that the
consumer is not likely to be reliant on income from the comparator scheme. (2) If the answer to either 10.2(6)(a) or (b) is ‘no’, conclude that the consumer is likely to be reliant on income from the comparator scheme. (3) If the firm has not obtained the necessary information in all of the Information Areas 5, 6 and 7 of the Information Section and so it is not possible to carry out the steps in 10.2R(1) to (6), conclude that the firm has not demonstrated that it has a reasonable basis for believing that the consumer is able to bear the risk of the pension transfer to achieve their objective. Example 2: the aim of the transfer is to pass the value of the pension to beneficiaries on the member’s death, but the firm has not demonstrated that the consumer can bear the risk of the transfer that would be needed to achieve this objective
10.4 R Refer to Information Area 2 of the Information Section:
(1) if the consumer has a priority objective to pass the value of the pension to beneficiaries on their death, take the steps in 10.5R; or (2) if the consumer does not have this priority objective answer ‘no’ to this question and proceed to Example 3.
10.5 R Take the following steps to determine whether this example is present:
(1) Review the available evidence in Information Areas 2, 5,6 and 7 of the Information Section. (2) Refer to Tables 1 and 2 in CONRED 4 Annex 22G and the available evidence to identify what death benefits were likely to be available for beneficiaries on the member’s death:
(a) (in all cases) in the proposed arrangement having regard to the way the consumer is likely to access their pension scheme throughout retirement; and (b) in the comparator scheme.

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(3) Identify whether there was an alternative way to meet the consumer’s objective without giving up comparator scheme benefits, including:
(a) level term assurance for the required sum; or (b) decreasing term assurance for an appropriate term; or (c) using available death in service cover. (4) Decide whether the firm has a reasonable basis for believing that:
(a) the recommendation to transfer in order to pass the value of the pension to beneficiaries on the member’s death meets the consumer’s investment objectives; and (b) the consumer is able financially to bear any transfer-related risks consistent with their investment objectives.
10.6 E Answer ‘yes’ to this question when the available evidence demonstrates that:
(1) the consumer did not have the requisite capacity for loss because they were not able to forego comparator scheme benefits to achieve this objective; and/or (2) a lower risk suitable alternative was available to achieve this objective; and/or (3) it was likely that the consumer would exhaust their pension savings during their lifetime (having regard to how the consumer will access their pension savings and the factors listed at 10.2R(5) above) and so there will be minimal death benefits available; and/or (4) the firm has not obtained the necessary information in both of the Information Areas 5 and 6 of the Information Section and so it is not possible to complete the assessment in 10.4R because the firm has not demonstrated that it has a reasonable basis for believing that the consumer is able to bear the risk of the pension transfer to achieve this objective; and/or (5) the firm has not obtained the necessary information in Area 2 of the Information Section and so it is not possible to understand the consumer’s rationale for pursuing this objective. Example 3: the aim of the transfer is to access income-related benefits flexibly but the firm has not demonstrated that the consumer can bear the risk of the transfer that would be needed to achieve this objective
10.7 R Refer to the available evidence in Information Area 2 of the Information
Section:

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(1) if the consumer has a priority objective to access income-related benefits flexibly or to take control of their benefits, take the steps in 10.8R; or (2) if the consumer does not have this priority objective, answer ‘no’ to this question and proceed to Example 4.
10.8 R Take the following steps to determine whether this example is present:
(1) Review the available evidence in Information Areas 2, 5 and 6 of the Information Section. (2) Identify why the consumer requires flexible access to or control over their income-related benefits and how the features of the proposed arrangement meet their objective(s). (3) Identify whether any alternatives are available to meet the consumer’s objective. (4) Decide whether the firm has a reasonable basis for believing that the recommendation to transfer to access income-related benefits flexibly:
(a) meets the consumer’s investment objectives; and (b) the consumer is able financially to bear any related risks consistent with their investment objectives.
10.9 E Answer ‘yes’ to this question when the available evidence demonstrates that:
(1) the consumer does not have the requisite capacity for loss because they were not able to forego scheme benefits to achieve this objective; and/or (2) there is an alternative way for the consumer to meet their objectives using other assets instead of transferring their BSPS scheme; and/or (3) the firm has not collected the necessary information in both of the Information Areas 5 and 6 of the Information Section and so it is not possible to complete the assessment in 10.8R because the firm has not demonstrated that it has a reasonable basis for believing that the consumer is able to bear the risk of the pension transfer to achieve this objective; and/or (4) the firm has not collected the necessary information in Information Area 2 of the Information Section and so it is not possible to understand the consumer’s rationale for pursing this objective.
10.10 G (1) The objective may be recorded as ‘flexibility’ or ‘control’ without
further explanation. It is up to the firm to demonstrate what is meant by ‘flexibility’ or ‘control’ with reference to the consumer’s circumstances and how the recommendation meets the consumer’s

FCA 2022/43 objectives and is suitable for their financial situation. The following examples may demonstrate a need for flexibility:
(a) if the consumer wishes to retire early and would like to access a higher amount of income in the short term in order to bridge an income gap until other guaranteed income commences, such as state pension; (b) if the consumer is in serious financial difficulty or facing financial hardship and needs to pay off or reduce debt prior to its planned redemption date, and the pension commencement lump sum from the comparator scheme(s) would be insufficient to meet this objective. The types of circumstances in which a consumer is likely to be able to show they are experiencing serious financial difficulty include where continuing to pay domestic bills and credit commitments is a heavy burden on the consumer and the consumer has missed payments for any credit commitments and/or any domestic bills in any 3 or more of the last 6 calendar months; (c) the consumer intends to reduce their working hours or take alternative work which may produce a lower income, prior to retiring fully, and it can be demonstrated that the transfer value is of sufficient value to support this objective without the risk of running out of money in the consumer’s lifetime. (2) A consumer may have a strong desire to transfer to obtain flexibility and control where they have real or perceived concerns regarding the financial viability in the scheme. The circumstances of the BSPS restructuring may have encouraged a greater than usual proportion of members to seriously consider the option of transferring out, which may in turn have led to an increased occurrence of consumers expressing a strong desire to transfer. However, this does not absolve the firm from its responsibility to only recommend a transfer if it can demonstrate that it is suitable. Example 4: the aim of the transfer is to maximise PCLS but the firm has not demonstrated that the consumer can bear the risk of the transfer that would be needed to achieve this objective
10.11 R Refer to the available evidence in Information Area 2 of the Information
Section:
(1) if the consumer has a priority objective(s) to maximise their pension commencement lump sum (PCLS), take the steps in 10.12R; or (2) if the consumer does not have this priority objective, answer ‘no’ to this question and proceed to Example 5.
10.12 R Take the following steps to determine whether this example is present:

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(1) Refer to the available evidence in Information Areas 2, 5 and 6 of the Information Section on the consumer’s objectives and financial situation. (2) Identify the PCLS option in the relevant comparator scheme(s). (3) Identify why the consumer wants to access their PCLS. (4) Identify whether the consumer needs to transfer to the proposed arrangement to access their PCLS or could have used:
(a) the PCLS from the comparator scheme; or (b) other assets to create a lump sum without transferring the pension. (5) Identify the impact taking their PCLS may have on the level of other benefits which the consumer may obtain from the comparator scheme.
10.13 E Answer ‘yes’ to this question when the available evidence demonstrates that:
(1) the consumer did not have the requisite capacity for loss because they were not able to forego scheme benefits to achieve this objective; and/or (2) there was an alternative way for the consumer to access income-related benefits flexibly without transferring their pension benefits; and/or (3) Example (1) is present and taking higher PCLS makes it likely that the consumer would exhaust their pension savings during their lifetime (having regard to how the consumer will access their pension savings and the factors listed at 10.2R(5) above); and/or (4) the firm has not collected the necessary information in both of the Information Areas 5 and 6 of the Information Section and so it is not possible to complete the assessment in 10.11R because the firm has not demonstrated that it has a reasonable basis for believing that the consumer is able to bear the risk of the pension transfer to achieve their objective; and/or (5) the firm has not obtained the necessary information in Information Area 2 of the Information Section and so it is not possible to understand the consumer’s rationale for pursuing this objective.
10.14 G For the purposes of 10.12R(4)(b), the firm should have considered the
following alternative options, where they were available:
(1) where the lump sum need/objective relates to paying off a debt, whether they can restructure a mortgage or other debt;

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(2) making increased contributions to a workplace pension scheme to increase the PCLS; (3) whether using the PCLS provision in the comparator scheme(s) will meet the consumer’s lump sum need/objective; (4) whether the consumer can meet their lump sum need/objective using other available funds in a scheme with flexible benefits or from other savings or investments; (5) taking a short-term loan. Example 5: an aim of the transfer is to preserve or protect the value of the consumer’s pension benefits but the comparator scheme(s) benefits would meet the consumer’s needs
10.15 R Refer to the available evidence in Information Area 2 of the Information
Section:
(1) if the consumer has any objective related to preserving the value of their pension benefits or protecting their benefits from the PPF, take the steps in 10.16R; or (2) if the consumer does not have this objective, answer ‘no’ to this question and proceed to Example 6.
10.16 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence in Information Areas 2, 5 and 6 of the Information Section on the consumer’s objectives and financial situation. (2) Identify the relevant comparator scheme(s) benefits. (3) Identify whether the comparator scheme(s) benefits would have met the consumer’s needs. To do this:
(a) identify the consumer’s needs in retirement; (b) refer to the available evidence and Table 2 in CONRED 4
Annex 22G to identify the pension benefits the consumer would
be likely to receive from the comparator scheme(s), having regard to the PPF income cap as it applied prior to 19 July 2021; and (c) decide whether the level of comparator scheme benefits would meet the consumer’s needs in (a).
10.17 E (1) Answer ‘yes’ to this question when the available evidence
demonstrates that:

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(a) the level of comparator scheme benefits meets the consumer’s income needs; and/or (b) where Example 7 is present, the consumer wanted guaranteed income or returns and the comparator scheme met those needs; and/or (c) the firm has not collected the necessary information in both of the Information Areas 5 and 6 of the Information Section and so it is not possible to complete the assessment in 10.16R because the firm has not demonstrated that it had a reasonable basis for believing that the consumer was able to bear the risk of the pension transfer to achieve their objective. (2) Answer ‘no’ to this question where the level of comparator scheme benefits was not likely to meet the consumer’s income needs in retirement. Example 6: the consumer wants to retire early but can meet their objective(s) in the comparator scheme(s)
10.18 R Refer to the available evidence in Information Area 2 of the Information
Section:
(1) if the consumer has a priority objective related to accessing benefits from their pension prior to the relevant scheme NRD (an ‘early retirement objective’), take the steps in 10.19R; or (2) if the consumer does not have this priority objective, answer ‘no’ to this question and proceed to Example 7.
10.19 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence in Information Areas 2, 5 and 6 of the Information Section on the consumer’s objectives and financial situation. (2) Refer to the available evidence and Table 2 in CONRED 4 Annex 22G to identify what early retirement options were likely to be available and any protected retirement ages in:
(a) the proposed arrangement; and
(b) the comparator scheme(s).
(3) Consider whether the consumer may have retired at a protected retirement age in the comparator scheme(s). (4) If (3) was not an option, identify whether there was an alternative way to meet the consumer’s objective without giving up the comparator scheme(s) benefits, including using:

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(a) other pensions (defined benefit or defined contribution); (b) income from part time work; and (c) savings, investments or other assets. (5) Decide whether the firm has a reasonable basis for believing that the recommendation to transfer to retire early:
(a) meets the consumer’s investment objectives; and (b) the consumer is able financially to bear any risks consistent with their investment objectives.
10.20 E Answer ‘yes’ to this question when the available evidence demonstrates that:
(1) the consumer could have retired in the comparator scheme(s) at a protected retirement age; and/or (2) the consumer did not have the requisite capacity for loss because they were not able to forego comparator scheme benefits to achieve this objective; and/or (3) a lower risk suitable alternative was available to achieve this objective; and/or (4) it was likely that the consumer would exhaust their pension savings during their lifetime (having regard to how the consumer will access their pension savings and the factors listed at paragraph 10.2R(5) above) and so there will be minimal death benefits available; and/or (5) the firm has not collected the necessary information in both of the Information Areas 5 and 6 of the Information Section and so it is not possible to complete the assessment in 10.19R because the firm has not demonstrated that it has a reasonable basis for believing that the consumer is able to bear the risk of the pension transfer to achieve this objective; and/or (6) the firm has not collected the necessary information in Information Area 2 of the Information Section and so it is not possible to understand the consumer’s rationale for this objective. Example 7: the consumer wants or prefers guaranteed income or returns
10.21 R Refer to the available evidence in Information Areas 2 and 3 of the
Information Section:
(1) if the consumer wants or indicates a preference for guaranteed income or returns, take the steps in 10.22R; and/or

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(2) if the consumer does not have this objective, answer ‘no’ to this question and proceed to Example 8.
10.22 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence in Information Areas 2, 6 and 7 of the Information Section on the consumer’s objectives and financial situation. (2) Identify whether the proposed arrangement:
(a) guarantees the consumer’s income or returns; or (b) takes into account the consumer’s preference for a guarantee and puts in place a sustainable strategy to achieve this end. (3) Determine whether the recommendation to transfer met the consumer’s preference for guaranteed income or returns.
10.23 E Answer ‘yes’ to this question when the available evidence demonstrates that:
(1) the consumer wants or has indicated a preference for guaranteed income or returns throughout retirement; and (2) the firm has recommended that the consumer transfer into a proposed arrangement that does not meet these needs; or (3) the firm has not collected the necessary information in Information Area 3 of the Information Section about the consumer’s attitude towards secure income or guarantees and so it is not possible to complete the assessment in 10.22R because the firm has not demonstrated that it has a reasonable basis for believing that the consumer has the requisite attitude to risk; or (4) Example 8 is present. Example 8: the consumer does not have the necessary attitude to risk
10.24 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence in Information Areas 3 and 5 of the Information Section regarding the consumer’s preferences regarding risk taking and risk profile and their understanding of the risk of transfer. (2) Compare (a) with (b):
(a) the consumer’s preferences regarding the risks specific to pension transfers in general, focusing on the consumer’s attitude to:

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(i) safeguarded benefits or guarantees;
(ii) flexible benefits or the ability to control how and when they withdraw money from their pension savings; (iii) managing their investments or paying for someone to manage their investments on their behalf; and (iv) the long-term sustainability of their fund; (b) the risks associated with a pension transfer that the consumer must have been willing to take for a recommendation to transfer to be suitable. The relevant transfer risks are:
(i) that their investments in the proposed arrangement will not perform as expected, and they will have less income in retirement (investment risk); (ii) that the withdrawals from the proposed arrangement (planned and/or ad hoc) are not sustainable and the consumer will run out of money in retirement (longevity risk); (iii) that inflation will erode the real value of the income they are able to draw from the proposed arrangement (inflation risk); and (iv) that the consumer and/or their partner may become less able to make the necessary financial decisions in relation to their income as they age (for example, due to illness or diminishing capacity). (3) Decide, with reference to (2)(a), whether the consumer was willing to take the risks associated with a pension transfer in (2)(b).
10.25 E (1) Answer ‘yes’ when the available evidence demonstrates that:
(a) the consumer was not willing to take the risks in 10.24R(2)(a); and/or (b) Example 7 or 10 is present; and/or (c) the firm has not collected the necessary information in Information Area 3 or 4 of the Information Section and so it is not possible to complete the assessment in 10.24R(3) because the firm has not demonstrated that the recommendation meets the consumer’s objectives. Example 9: the firm’s transfer analysis does not support a recommendation to transfer

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10.26 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence in Information Areas 7, 8 and 9 of the Information Section, the transfer value analysis and the suitability report. (2) Identify the benefits and options available in the proposed arrangement. (3) Identify the benefits and options likely (on reasonable assumptions) to be paid in the comparator scheme(s). (4) Review the firm’s analysis of the effect of replacing the benefits in the comparator scheme with the benefits in the proposed arrangement, having regard to the consumer’s circumstances, including their age, marital status and, where relevant, their objectives for taking a PCLS or early retirement. (5) Compare (a) with (b):
(a) the rate of return required on investments in the proposed arrangement to match the income benefits in the comparator scheme(s) that is relevant to the consumer’s circumstances and objectives:
(i) if the consumer is single or unmarried, use the single life critical yield; (ii) if the consumer is taking a PCLS, use the critical yield that factors in the consumer taking the PCLS; (iii) if the consumer wishes to retire early, use the critical yield at the early retirement date; (b) the investment risk that the consumer must be willing and able to take in the proposed arrangement (taking into account a realistic rate of return) to match the desired income benefits in the comparator scheme(s). (6) Review how the firm says the transfer analysis supports the firm’s recommendation to transfer. (7) Decide whether the firm has demonstrated that the transfer analysis supports the recommendation to transfer, taking into account:
(a) the comparison undertaken at (5); and
(b) the analysis carried out by the firm and assessed at (4) and (6).
10.27 E (1) Answer ‘yes’ to this question when the available evidence
demonstrates that:

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(a) the firm has not demonstrated that the transfer analysis supports the recommendation to transfer, for example because:
(i) the critical yield indicated in the transfer value analysis is likely to be unattainable, factoring in the term to retirement and the consumer’s attitude to investment risk; or (ii) the capitalised value of death benefits (where this is a priority objective) is significantly higher under the comparator scheme(s) than that available from the proposed arrangement; and/or (b) the consumer would not have been able to match the rate of return to replicate the benefits being given up if they invested in line with their attitude to risk; and/or (c) Example 8 is present; and/or (d) Example 1 is present; and/or (e) the firm has not collected the necessary information in Information Area 7 or 9 of the Information Section and so it is not possible to complete the assessment in 10.26 because the firm has not demonstrated that the recommendation meets the consumer’s objectives. Example 10: the firm did not have a reasonable basis for believing that the consumer had the necessary knowledge and experience to understand the risks involved in transferring their DB scheme
10.28 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence and the information recorded in Information Area 4 of the Information Section, including:
(a) the correspondence with the consumer;
(b) the transfer analysis; and
(c) the suitability report.
(2) Establish the consumer’s level of investment experience and knowledge of pension transfers, pensions and investments at the time of the advice:
(a) in relation to defined benefit occupational pension schemes; (b) in relation to defined contribution schemes;

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(c) in relation to the cash equivalent transfer value offered, including any actuarial reductions; (d) in relation to the separate roles of the trustee and the sponsoring employer of a scheme; (e) in relation to the features, benefits and risks of the comparator scheme available to it at the time; and (f) generally, in relation to pensions and investments. (3) Identify the steps that the firm took to establish that the consumer could appreciate the nature of the risks they were taking with this transfer. (4) Identify the steps the firm took to address the consumer’s behavioural response to their situation in a balanced and rational way, including:
(a) any misunderstandings the consumer had about the benefits available in the comparator scheme(s); (b) the roles of trustee and the employer where the consumer was concerned about belonging to a scheme where the employer would continue to be involved; (c) the level of the cash equivalent transfer value on offer, including any actuarial reductions that were being applied at the time the value was prepared; (d) any concerns the consumer had about the financial viability of the comparator scheme(s); and (e) the role of the firm and their professional duties when providing pension transfer advice. (5) Identify the steps that the firm took to ensure that the consumer understood the firm’s transfer analysis and its advice. (6) Decide whether the consumer had the necessary experience and knowledge to understand the risks involved in transferring to the proposed scheme, taking into account, in particular:
(a) what the consumer already understood, including information such as:
(i) information about the consumer’s existing investment and pensions portfolio and the nature, volume and frequency of the consumer’s transactions in pensions and investments; (ii) how long the consumer has been an investor;

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(iii) the consumer’s experience with, and knowledge of, personal, stakeholder or workplace pension schemes; (iv) the consumer’s experience of managing their pension or other investments or using a financial adviser to manage these investments; (v) the consumer’s profession (if any), including whether it is relevant to understanding defined benefit pension transfer advice and investment advice; (vi) whether the consumer had characteristics of vulnerability and the impact this had on the suitability of advice; (b) how the firm communicated the following to the consumer:
(i) the risks of transferring the consumer’s pension and investing in a scheme with flexible benefits; (ii) the outcomes from the transfer analysis and whether the firm drew the attention to the factors that did, and did not, support the firm’s advice; (iii) the option to remain in BSPS while it entered the PPF assessment period, and the overall safety of their pension savings during this time; and (iv) the option to transfer to BSPS2, including the role of the trustee and the sponsoring employer and the ability to transfer out of BSPS2 at a later date; (c) if the consumer approached the firm for advice before 12 October 2017 and the Time to Choose period, consider:
(i) whether the firm should have waited until more information was available about the comparator scheme(s) to provide the recommendation; (ii) what information the firm was able to provide the consumer with about the options in the comparator scheme(s); and (iii) the effect of any failure to obtain information about the comparator scheme(s) on the consumer’s understanding of their options and the risk of transfer; (d) what the consumer is likely to have understood after this information was provided, taking into account the overall impression that the consumer would reasonably have had of the features and risks of a transfer, particularly in the light of:

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(i) the entirety of the firm’s communications with the consumer, including communications the consumer received from the scheme trustees; (ii) the extent to which the firm’s communications were balanced and rational in their presentation of features and risks; and (iii) the consumer’s relevant experience and knowledge in (2) above.
10.29 E Answer ‘yes’ to this question where:
(1) the firm did not communicate in substance the risks of transferring in a way the consumer would have understood; and/or (2) the firm did not take reasonable steps to ensure that the consumer understood the firm’s transfer analysis, their option to transfer to a comparator scheme, and its advice; and/or (3) the firm did not take reasonable steps to correct any misunderstandings the consumer had in relation to the benefits available and/or the security of their benefits in the comparator schemes; and/or (4) the firm has not collected the necessary information in Information Area 4 of the Information Section and so it is not possible to complete the assessment in 10.28R because the firm does not have a reasonable basis for believing that the consumer has the necessary knowledge and experience to transfer. Example 11: the consumer is under 50 and cannot bear the risks of transfer
10.30 R (1) Refer to the available evidence in Information Area 1 of the
Information Section; and
(2) Identify whether the consumer’s age at the time of the advice is 50 or under and:
(a) if the consumer is under 50, take the steps in 10.31R; or (b) if the consumer is 50 or over, answer ‘no’ to this question and proceed to Example 12.
10.31 R Take the following steps to determine whether this example is present:
(1) Refer to the available evidence recorded in the Information Areas 1, 2, 3, 7 and 9 of the Information Section and to the scheme benefits available in the comparator scheme(s) (see CONRED 4 Annex 22G at
Table 2).

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(2) Identify the minimum age that the consumer can draw benefits from the comparator scheme(s), including their option to take any protected retirement benefits. (3) Identify the objective for the transfer and:
(a) the amount needed;
(b) the date the amount is needed; and
(c) why the consumer needs to transfer their comparator scheme(s) benefits now, taking into account when the consumer wants to:
(i) release capital and/or tax-free cash from their scheme; and (ii) draw an income from the scheme; (d) the alternatives available to achieve the objective, including:
(i) the option to remain in the scheme and wait for the outcome of the PPF assessment; (ii) the option to remain in the scheme and transfer into BSPS2; and (iii) use of other assets to achieve the consumer’s objective. (4) Consider the investment strategy in the proposed arrangement and whether the consumer had the requisite attitude to the risks of investment in the proposed arrangement, including inflation risk. (5) If the consumer approached the firm for advice before 12 October 2017 and the Time to Choose period, consider:
(a) whether the firm should have waited until more information was available about the comparator scheme(s) to provide the recommendation; (b) what information the firm was able to provide the consumer with about the options in the comparator scheme(s); and (c) evaluate the effect of any failure to obtain information about the comparator scheme(s) on the consumer’s understanding of their options and the risk of transfer. (6) Decide whether the firm had a reasonable basis for believing that the consumer was able financially to bear the investment risk consistent with their investment objectives and had the knowledge and experience to transfer.

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10.32 E Answer ‘yes’ to this question when the available evidence demonstrates that:
(1) the consumer was unable financially to bear the long-term investment risks associated with an investment in the proposed arrangement; and/or (2) Example 10 is present and the consumer did not have the requisite knowledge and experience to understand their options and the risk of transfer; and/or (3) the firm should have waited for more information to become available before it advised the consumer ahead of the Time to Choose exercise; and/or (4) the consumer’s objectives for the transfer, their intended retirement date, and investments were uncertain or not clearly defined and the firm’s recommendation to transfer has exposed the consumer to financial and other risks that they did not need to take with this investment. Example 12: the recommendation to transfer is unsuitable for the consumer’s investment objectives or for their financial situation for some other reason
10.33 R Take the following steps:
(1) Refer to the available evidence and the information recorded in Information Areas 2, 6 and 7 of the Information Section. (2) Refer to the features and benefits of the comparator scheme(s) at CONRED 4 Annex 22G. (3) Consider whether there is any reason, other than the reasons at examples 1 to 11 above, why the recommendation to transfer was unsuitable for the consumer’s investment objectives or financial situation.
10.34 G This example may be present when:
(1) the transfer would result in a tax liability that the consumer is unwilling or unable to pay; and/or (2) the consumer could have taken an alternative course of action to meet their objectives (other than the specific objectives identified in the examples above) with less cost or less risk; and/or (3) the consumer has a specific objective in mind for the transfer (other than the objectives listed in Examples 2, 3, 4, 5 and 6 above), but this objective can be met without a pension transfer; and/or (4) the firm has recommended a transfer to mitigate against the risk of future redundancy, when there is no evidence on file that the consumer

FCA 2022/43 is at imminent risk of being made redundant or that redundancy was likely to cause significant financial hardship. 11 Causation Section
11.1 G The Causation Section is used to record the assessment of whether or not the
consumer’s loss was as a result of (or caused by) the firm’s failure to comply with the suitability requirements.
11.2 G The Causation Section proceeds on an assumption that the consumer suffered
a loss by transferring their BSPS to the proposed arrangement. Whether or not there was actually a loss is dealt with in the Redress Section.
11.3 R Complete the Causation Section where the assessor has concluded that the
firm has failed to comply with the suitability requirements.
11.4 R Take the following steps to complete the Causation Section:
(1) Review the available evidence any communications to consumers during the relevant period, including those listed in CONRED 4 Annex 22G at Table 3, and any other relevant information recorded in the Information Section and Suitability Section of the BSPS DBAAT. (2) Determine whether the firm’s failure to comply with the suitability requirements (‘non-compliant conduct’) caused the consumer to transfer their BSPS to the proposed arrangement (the ‘causation question’). (3) Answer the causation question by selecting ‘yes’ or ‘no’. (4) Explain the conclusion on the causation question with reference to the evidence at (1).
11.5 R To answer the causation question, decide whether it is more likely than not
that the firm’s non-compliant conduct was the effective cause of the consumer’s decision to transfer.
11.6 G The effective cause in 11.5R above does not have to be the sole or primary
cause of the consumer’s decision. In particular:
(1) as long as the non-compliant conduct was an effective cause of the consumer’s decision, it is immaterial that other factors (for example, the influence of a third party such as an introducer) also influenced that decision; (2) the firm’s non-compliant conduct will not have been the effective cause of the consumer’s loss if it is more likely than not that the consumer would have transferred their BSPS to the proposed scheme in the absence of non-compliant conduct. This may occur if, for example, the firm gave an unsuitable recommendation to transfer but

FCA 2022/43 the consumer would still have transferred their BSPS to the proposed scheme even if the firm had complied with the suitability requirements.
11.7 G For the purposes of the determination under 11.4R(2), have regard to the
impact of the firm’s non-compliant conduct on the consumer’s decision to transfer, including:
(1) the consumer’s demands, needs and intentions at the time of the advice, including in relation to:
(a) the consumer’s financial situation;
(b) any potential tax or other liabilities the consumer has; (c) the consumer’s objectives and future financial needs throughout retirement; (d) the consumer’s age and expected retirement age; (e) the consumer’s state of health; and (f) the consumer’s timeline for making any relevant decision about their BSPS in light of the BSPS restructuring; (2) the consumer’s knowledge and experience at the relevant time, including:
(a) the consumer’s knowledge and experience as recorded in the Information Section; (b) the extent to which the consumer understood the changes to the BSPS, the operation of the PPF, and other relevant matters in the BSPS restructuring following the publication of the Regulated Apportionment Agreement, or whether the consumer would have made a decision solely or primarily on the firm’s recommendation; (c) the extent to which the consumer understood the detailed reasoning (if any) within the firm’s advice, or would have made a decision solely or primarily based on the firm’s recommendation overall; (d) the extent to which the consumer read the firm’s written advice (or would have made a decision solely or primarily based on advice given orally); and (e) the extent to which the consumer considered whether to take the relevant step independently of the firm’s advice.

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(3) whether the consumer had characteristics of vulnerability as recorded in the Information Section; (4) the relevance of surrounding circumstances, including publicly available information at the time, such as the information listed in CONRED 4 Annex 22G at Table 3, paying due regard to the reliance the consumer was reasonably likely to place on the personal recommendation of the firm as compared with generic and/or publicly available information; (5) the significance of any particular features of the BSPS, BSPS2, the PPF and the proposed arrangement, as regards the consumer’s specific demands, needs and intentions; (6) whether the consumer sought specific information from the firm and to what extent that information was provided to the consumer. If the consumer has sought specific information from the firm, then it is more likely that the information was relatively important to the consumer when making a decision as to whether to take a relevant action; (7) whether the consumer was informed about the particular risks and benefits of:
(a) staying in the BSPS and moving into the PPF; (b) joining BSPS2; or (c) transferring to the proposed arrangement, where those risks and benefits were of particular concern to the consumer (given their demands, needs and intentions); (8) whether a failure to provide information under (7)R above may make it more likely that the non-compliant conduct caused the consumer to take the decision they did; (9) the consumer’s knowledge and experience at the relevant time, including:
(a) the consumer’s knowledge and experience as recorded in the Information Section; (b) the extent to which the consumer understood the changes to the BSPS, the operation of the PPF, and other relevant matters in the BSPS restructuring following the publication of the Regulated Apportionment Agreement, or whether the consumer would have made a decision solely or primarily on the firm’s recommendation; (c) the extent to which the consumer understood the detailed reasoning (if any) within the firm’s advice, or would have made

FCA 2022/43 a decision solely or primarily based on the firm’s recommendation overall; (d) the extent to which the consumer read the firm’s written advice (or would have made a decision solely or primarily based on advice given orally); and (e) the extent to which the consumer considered whether to take the relevant step independently of the firm’s advice. 12 Attestation Section
12.1 G This section is for the senior manager at the firm to complete in compliance
with CONRED 4.3.2R(3).
12.2 R The attestation must be signed by an individual approved to perform the
SMF16 (Compliance oversight) FCA controlled function for the firm or by an individual approved to perform another appropriate senior management function within the firm.
12.3 R For the purposes of 12.2R, a notification is to be treated as signed where any
of the following apply:
(1) it contains an image of a ‘wet ink’ signature applied by the appropriate individual; (2) it contains an electronic signature applied by the appropriate individual; or (3) it contains a typed signature applied by, or with the express consent of, the appropriate individual. 13 Redress Calculation BSPS calculator instructions
13.1 R The following definitions are used in this section:
(1) ‘assumptions’ are the economic, demographic and other assumptions to be used in the redress calculation set out at DISP App 4 Annex 1; (2) ‘BSPS calculator’ has the meaning in CONRED 4.1.1R(3); (3) ‘calculation date’ has the meaning in DISP App 4.1.1R(6); (4) ‘comparator scheme’ is the scheme identified at CONRED 4 Annex 21 13.21R to 13.26R; (5) ‘DC pension arrangement’ means any pension arrangement holding the value of the consumer’s pension benefits which originated from the BSPS, including where the arrangement has been subsequently switched to a new arrangement;

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(6) ‘DOL’ is the date that the BSPS member left active service in the BSPS; (7) ‘input’ is information entered into the BSPS calculator; (8) ‘output’ is the report produced by the BSPS calculator setting out the redress calculation, together with a summary of the inputs and the effect of any adjustments made; (9) ‘PPF’ includes any benefits bought out by PIC. The BSPS PPF benefit structure will be automatically mapped to PIC Scheme Benefits that are expected to be secured with PIC in 2022/2023; (10) ‘PIC’ is the Pensions Insurance Corporation; (11) ‘primary compensation sum’ is the amount calculated in accordance with DISP App 4.3.19R, adjusted to take account of the consumer’s tax position and any entitlement to means-tested state benefits; (12) ‘quarter’ is the period of three months commencing 1 January, 1 April, 1 July and 1 October in each year; (13) ‘secondary compensation sum’ is the amount comprising any consequential losses, including any initial adviser charges on the DC pension arrangement and the primary compensation sum; (14) ‘Section’ is each former defined benefit occupational pension scheme that was merged into the BSPS over time; (15) ‘tranche’ is an element of pension benefit which typically has a unique combination of revaluation increases before coming into payment and pension increases during payment, but may also have a unique payment starting age or payment end age; and (16) ‘valuation date’ has the meaning in DISP App 4.1.1R(25). Using the BSPS calculator
13.2 R This section sets out the instructions for using the BSPS calculator. The BSPS
calculator is used to calculate the redress (if any) payable to a consumer, their spouse or beneficiary in a scheme case where the firm has determined that:
(1) the firm has failed to comply with the suitability requirements; and (2) the firm’s non-compliant conduct was the effective cause of the consumer’s BSPS pension transfer.
13.3 R (1) The BSPS calculator carries out Step 3 at DISP App 4.3.19R to
4.3.26R and the parts of Step 4 at DISP App 4.3.27R to 4.3.29R and DISP App 4.3.32.

Lineage: No known changes