The Financial Conduct Authority has formally required two firms to stop making unsolicited settlement offers to former members of the British Steel Pension Scheme (BSPS).

On 7 February, the FCA had warned advice firms they should stop making these approaches.

Abbey Lane Financial Associates Limited and Estate Capital Financial Management Limited are the two firms that the FCA required to stop making these unsolicited settlement offers.

Abbey Lane made offers of £100 to 82% of its clients who were BSPS members, while Estate Capital made offers of £300 to 83% of its former BSPS members.

“We are concerned that these offers are significantly misaligned with the average calculated redress of £45,000 for former BSPS members who received unsuitable pension transfer advice,” the FCA stated.

Both firms will be required to apply the redress scheme to consumers who have accepted these offers in the same way they must for consumers who have not accepted offers.

This means that they should receive the appropriate amount of redress.

“We will not tolerate this behaviour and we will take further firm action to put a stop to this sharp practice as needed,” the FCA added.

Under the redress scheme, firms will have to review the advice they gave. They will have to pay redress to those who lost money as a result of unsuitable advice.

The FCA warned that these unsolicited settlement offers are likely to give less money to steelworkers than they are entitled to under the redress scheme.

The regulator stated that they are a “deliberate attempt” to exclude former BSPS members from the redress scheme.

The FCA warned firms involved to withdraw any existing settlement offers currently pending any consumer agreement.

It also wants firms to treat any pending settlement offers as withdrawn and to cease making any further offers to former BSPS members who have not made complaints.

The British Steel Adviser Group called the FCA’s statement “misleading” and compared it to a “diversion tactic”.

It stated: “The FCA admitting that they have not undertaken any of their own calculations tells you everything.  How can they say an offer is wrong without testing it ?”

“The FCA know that they are going to oversee a zero redress, redress scheme, which makes them look silly.  Picking on small firms at this point, is simply a diversion tactic.”

“The OIREQs have little real effect on firms and are more for PR than anything else.“