The regulator announced emergency rules on 25th April 2022 to prevent firms who advised BSPS members to transfer their benefits out of the scheme from disposing of assets to avoid paying compensation under a potential consumer redress scheme.
The rules came into force on 27 April 2022 and will continue until 31 January 2023.
The emergency rules increase the likelihood that former BSPS members will get compensation directly from firms for any losses they suffered from being given unsuitable pension transfer advice.
This will help make sure the firms responsible for these redress liabilities meet the cost of them, rather than the costs being borne by other FSCS levy payers, and ultimately being passed on to consumers.
There are 101 firms in scope of the rules. The rules apply to firms who provided pension transfer advice to BSPS members between 26 May 2016 to 29 March 2018, unless specifically excluded.
Firms are out of scope of the requirements if they are:
- A firm that provided BSPS advice during the relevant period to fewer than 5 BSPS members,
- Unlimited partnerships
- Sole traders
- Already subject to similar restrictions
- Dual regulated by the Prudential Regulation Authority (PRA), or
- Subject to an insolvency order
Under the rules, firms had until 27 May 2022 to complete an initial financial resilience assessment (FRA) to establish whether they had sufficient financial resources to meet potential BSPS redress liabilities.
An initial FRA has been completed by all 101 in scope firms. As of this month, 26 of these firms confirmed they failed the assessment and so are subject to an asset restriction.
This number may change as firms must complete the FRA every month or immediately following any material change in their financial circumstances.