Target Newsletter - Issue 186 February 2023

Paradigm Compliance Update PS23/1: Extended asset retention requirement for firms under the British Steel Pension Scheme consumer redress scheme

By Matthew Blackburn Consultant (Technical Helpdesk)

Rules extension The new rules extend the asset retention requirement and will apply until firms have resolved all BSPS cases in scope of the redress scheme and some BSPS cases that fall outside the scheme such as certain complaints that have been referred to FOS and cases that are subject to a past business review but would otherwise have been in scope. The rules apply to firms that provided BSPS advice between 26 May 2016 and 29 March 2018 unless they only provided BSPS transfer advice to one or two clients or they are sole traders or unlimited partnerships. Before 31 January 2023 the rules did not apply to firms who had four or fewer cases that were in scope of the BSPS redress scheme. Financial Resilience Assessment Firms that are subject to the asset retention rules must assess whether they are likely to meet their potential BSPS redress liabilities on a monthly basis and complete a Financial Resilience Assessment (FRA). The calculation is detailed in full in Chapter 5 of CP22/22 Proposed extended asset retention requirement for firms under the British Steel Pension Scheme consumer redress scheme . Firms that have not previously completed an FRA - firms that have three or four BSPS redress cases - must report the outcome of the assessment to the FCA by 28 February 2023. Asset restriction rules If the FRA suggests that a firm may not have sufficient assets to meet its estimated BSPS liabilities, the asset restriction rules will prevent it from making certain transactions

Introduction The FCA has published final rules to extend the asset retention requirement for some firms that provided transfer advice to British Steel Pension Scheme (BSPS) members. This requirement is designed to ensure that firms that gave bad BSPS advice meet the cost of the redress liabilities that arise and reduce the risk of their failing with costs then passing to FSCS levy payers.

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