On 28 November 2022, we published a Policy Statement[1] setting out final rules for a redress scheme for former members of the British Steel Pension Scheme (BSPS) who transferred out after receiving unsuitable advice to do so. The scheme implementation date is 28 February 2023.

CONRED 4[2] sets out the steps that firms need to take under this scheme and by when. A flow chart is also available in CONRED 4 Annex 18G[3]. 

*If the advice was unsuitable (step 3) either step 4 or step 5 will apply.

Firms are also subject to ongoing reporting requirements during the scheme, which are outlined in CONRED 4.8[4].

Defined Benefit Advice Assessment Tool (DBAAT)

Firms will need to use the BSPS Defined Benefit Advice Assessment Tool (DBAAT) in their assessments. The BSPS DBAAT consists of two parts:

1. The BSPS DBAAT template[5] – an excel based workbook for completing and recording the review.
2. The BSPS DBAAT instructions[6] – the detailed instructions for completing the BSPS DBAAT template which is copied directly from CONRED 4 Annex 21R[7] and 22G[8]. 

CONRED 4.3.2R(2)(b) permits firms to use the FCA DBAAT[9] in place of the BSPS DBAAT where a review was completed by the firm before 28 February 2022.  If a firm chooses to rely on an already completed FCA DBAAT, CONRED 4.3.2R(4) explains that they must also complete an attestation as provided in CONRED 4 Annex 19R[10].

Redress calculator

Firms will need to use the FCA calculator for scheme cases and our expectation is firms should also use it for non-scheme cases. This is particularly important for non-scheme cases where the comparator scheme is the Pension Protection Fund (PPF) to ensure that the calculation takes account of the Pensions Insurance Corporation buyout to assess redress fairly (DISP 1.4.1R). Firms should be aware that non-scheme cases where advice was given before 6 April 2016 may additionally require a State Earnings Related Pension Scheme (SERPs) adjustment. 

We developed the calculator to make calculations more consistent under the scheme and to ensure consumers receive fair and quicker redress. It will also reduce the burden on firms by removing the need for actuarial support in most calculations.  

Our calculator has been prepared in accordance with technical actuarial standards (TAS 100 and TAS 300) as issued by the Financial Reporting Council. 

We are emailing this calculator to all firms subject to the redress scheme. This is to ensure all firms in scope of the scheme have access to the most up to date version of the calculator and are notified each time it is updated. 

We have developed 2 documents to assist firms using the calculator. These are: 

1. a User Guide[12] outlining each of the steps involved, from accessing and opening the calculator through to inputting information, creating outputs, and what firms must do with these outputs 
2. a Technical Report[13] containing details on the calculator inputs and setting out the calculation methodology used in the calculator 

When calculating compensation, we expect firms to consider any claims for consequential losses fairly. Consequential losses will vary depending on individual circumstances but could include non-financial impacts such as distress and inconvenience.

We’ll update the calculator each quarter to reflect the new assumptions that firms must use from the first day of each quarter (DISP App 4.3.23R). We’ll email a new version of the calculator to all firms subject to the scheme, which reflects the ‘current’ assumptions at the start of each quarter.  

To give us time to incorporate these new assumptions into the calculator, the update is likely to be shared with firms during the second week of each quarter. This means firms should get a new version of the calculator during the second week of January, April, July and October. 

As part of the calculator build and preparation of the Technical Report, we appointed the Government Actuary’s Department (GAD) to review whether the Technical Report is consistent with the relevant rules in DISP App 4 and DISP App 4 Annex 1, as modified by CONRED 4.  

The GAD review also looked at available information on the BSPS benefit structure and whether this was accurately built into the Technical Report. GAD have confirmed their view that the Technical Report appropriately reflects our guidance and the particular features of the BSPS arrangements, subject to the additional points made in their full statement[14].