Source · Select Committees · Public Accounts Committee
Recommendation 14
14
The FCA oversees the consumer redress process which intends to put consumers back into the...
Conclusion
The FCA oversees the consumer redress process which intends to put consumers back into the financial position they would have been in if unsuitable advice had not been given.45 Consumers must raise complaints directly with advice firms or the FOS within six years of receiving unsuitable advice. However, BSPS members face significant delays in receiving compensation and those that have not yet raised complaints risk falling victim to the six-year limitation period.46 The FOS is yet to resolve 480 complaints and, due to 37 Q 48 (13 June) 38 Qq 77, 78 (27 April) 39 Q 110 (27 April) 40 Q 30 (27 April) 41 Q 26 (27 April) 42 C&AG’s Report, para 2.14 43 Q 77 (27 April) 44 Q 110 (27 April) 45 C&AG’s Report, para 3.2 46 Q 19 (27 April) Investigation into the British Steel Pension Scheme 13 their complexity, complaints take an average of 8 months to be completed with some taking as long as 31 months.47 The FOS told us that it has increased resources and added 25 specialists to address the complex backlog of BSPS cases.48
Government Response
Not Addressed
HM Government
Not Addressed
The FCA has considered how further redress mechanisms can be implemented more quickly and provide fair compensation. 4.2 The FCA Business Plan for 2022/23 sets out its plans to improve the redress framework, including carrying out redress exercises with firms where appropriate, so they can quickly remedy harm. There are several ways for firms or the FCA to deliver redress to consumers, including a complaints-led approach, voluntary firm-led approaches, or a more formal redress scheme imposed by the FCA on a statutory basis (such as section 404 multi- firm redress schemes and single firm redress schemes). Some of the more formal approaches may take more time to implement than others, but redress should be consistent and fair regardless of which approach is chosen. 4.3 There are a number of factors that can affect how quickly consumers can access redress including consumer engagement and firms’ willingness to co-operate. The FCA understands that many consumers who transferred out of BSPS are not considering making a complaint about the advice they were given. Some of these consumers have vulnerable characteristics and need help to identify whether the advice they were given was unsuitable. The FCA took this into account when considering whether a section 404 scheme was desirable compared to alternative options to ensure consumers receive redress. 4.4 The power in section 404 of the FSMA is a rule-making power (see paragraph 2.5). Before consulting on a consumer redress scheme, the FCA must carefully consider whether the relevant legal tests set out in FSMA are met. Prior to consulting on a scheme, the FCA will actively seek to engage in discussions with the industry and consumer groups about the issue. This process will assist in the consideration of all the available options and, if it is ultimately decided to pursue a scheme in order to address the issue, will ensure the FCA has a clear understanding of the issues that will need to be addressed in the formal consultation. 4.5 Rules made by the FCA under this power will be subject to a formal public consultation, including a cost benefit analysis. The FCA must also allow a reasonable amount of time for consultees (including financial services businesses) to submit their views, and for the FCA to give these responses due consideration. Where the FCA’s proposals are more complex and/or have a greater impact on firms, as will often be true in the case of a section 404 scheme, the evidence base the FCA needs to collate will necessarily be more comprehensive, and the consultation time period may need to be longer. In the case of CP 22/6, the consultation was open for three months.