FSCS expects four British Steel firms to fail in coming weeks

7 months, 3 weeks ago - February 11, 2022
British Steel
British Steel
The Financial Services Compensation Scheme (FSCS) expects four British Steel firms to fail over the coming weeks.

This follows the story that British Steel firm Argent Wealth Limited, defaulted on 8 February.

The new detail is contained in an email from FSCS chief executive Caroline Rainbird to South Wales MP Nick Smith.

Rainbird was responding to a number of questions Smith raised in an email dated 1 February about British Steel casework :

  • How many BSPS [British Steel Pension Scheme - editor's note] complaints are being dealt with by FSCS.
  • How many BSPS cases have been completed in each of the last three years.
  • What the percentage of complaints being upheld is.
  • The length of time it is taking to resolve complaints from when you receive information either from a complainant, or the FOS [Financial Ombudsman Service - editor's note], to when the case is resolved, would also be helpful. I note from separate correspondence with the FOS that 179 cases have been transferred from them to the FSCS as of 31 December 2021.
  • An assessment of whether more firms are likely to fail in coming weeks and what impact this will have on your work.
  • Are you able to proactively contact those steelworkers who you are aware received advice from firms which have since failed, to tell them they are eligible to complain.

In her email back (dated 10 February) Rainbird answered the above questions in turn.

Regarding the number of how many BSPS complaints are being dealt with by FSCS, she said: “As at 8 February, we have received 1,263 claims, of which we have upheld 638, 74 claims have not been upheld and we are yet to issue decisions on 551 claims (due to a number of reasons, including they are recent submissions, we are waiting for third-party data etc.).”

She also answered how many BSPS cases have been completed in each of the last three years

  • 2019 – 84 Completed – 73 with compensation
  • 2020 – 36 Completed – 25 with compensation
  • 2021 – 543 Completed – 490 with compensation

The uphold rate is 90% for British Steel complaints and while the average time to resolve them is 111 days.

Rainbird added: “It is important to note that the time taken to process a claim is often dependent on third-parties who are required to provide details for customers to us – including the administrators of the failed firm or other parties holding customer information, as well as from those firms acting on behalf of customers.

“This can slow the process down as third-parties might not respond in a timely manner or it might take time to track down who is responsible for providing the information in the first place.

“This means that we sometimes cannot turn around the claim as quickly as we are otherwise able to do.”

Smith also asked about the Financial Conduct Authority’s consultation to set up a standalone compensation scheme for British steelworkers.

This is expected to be launched by the end of March.

Rainbird said: “In terms of the BSPS redress scheme consultation due by the end of March, I am conscious that this is at an early stage and details will need to be considered in line with the consultation responses from stakeholders. However, I can give you my assurance that we are feeding all the relevant information into the FCA to help their analysis. We will continue to do what we can to help them in their decision making.”

Commenting on the significance of the correspondence, Smith told Money Marketing: “It makes the case for a redress scheme and justice for steel workers. It backs up the argument I made about how progress was initially slow to resolve the British Steel issue. And the need to crack down on rogue advisers and introducers. The FCA should support justice for steelworkers now through a redress scheme.”

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