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You are viewing the version of the document as on 2022-09-30.

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  1. Point in time
    2022-09-30

CONRED 3.1 Interpretation and application

Interpretation

CONRED 3.1.1R

1In this chapter, the following definitions apply:

  1. (1)

    ‘asset restriction’ means the restriction in CONRED 3.3.3R;

  2. (2)

    ‘BSPS’ means the Old British Steel Pension Scheme (known during the relevant period as the British Steel Pension Scheme) that entered a Pension Protection Fund assessment period on 29 March 2018;

  3. (3)

    ‘BSPS advice’ means advice in relation to which all of the following conditions are met:

    1. (a)

      the advice was given to a consumer during the relevant period;

    2. (b)

      the advice was to transfer the consumer’s BSPS pension benefits;

    3. (c)

      the advice was subject to the suitability requirements; and

    4. (d)

      the consumer subsequently transferred their BSPS pension benefits;

  4. (4)

    ‘BSPS claims’ means potential liability that a firm may incur for BSPS advice, determined as the product of N x L x AL (as defined in accordance with CONRED 3.2.2R);

  5. (5)

    ‘financial resilience assessment’ has the meaning in CONRED 3.2.2R(3);

  6. (6)

    ‘relevant period’ means 26 May 2016 to 29 March 2018 (inclusive of both dates);

  7. (7)

    ‘suitability requirements’ are the requirements in COBS 9.2.1R(1) and the common law duty in contract or tort to exercise reasonable skill and care in advising the consumer on pension transfers; and

  8. (8)

    ‘unsuitable BSPS advice’ is BSPS advice that does not comply with the suitability requirements that were in force during the relevant period.

Purpose

CONRED 3.1.2G

1The provisions in this chapter are ultimately intended to secure the payment of redress to consumers by ensuring that a firm does not inappropriately dissipate assets that could otherwise be used to fund redress payments. However, they do not relate directly to a consumer redress scheme and are not made using the power in section 404 of the Act.

Scope of application

CONRED 3.1.3R

1CONRED 3 applies to any firm (including a TP firm) that provided BSPS advice in the relevant period, except in the cases specified in CONRED 3.1.4R.

CONRED 3.1.4R

1CONRED 3 does not apply to any of the following:

  1. (1)

    a PRA-authorised person;

  2. (2)

    a firm that is a natural person or a partnership involving one or more natural persons;

  3. (3)

    a firm that is subject to an insolvency order;

  4. (4)

    a firm that has provided BSPS advice to a total of fewer than 5 members of the BSPS; or

  5. (5)

    a firm that is subject to an asset requirement that has comparable effect to CONRED 3.3.

CONRED 3.1.5G
  1. (1)

    1CONRED 3.1.4R disapplies the requirements in CONRED 3 for certain categories of firm where the FCA has concluded that:

    1. (a)

      due to the legal structure or status of the firms concerned, the requirements would be inappropriate, disproportionate or unnecessary; or

    2. (b)

      the relevant firms pose a lower relative risk of harm in relation to potential BSPS redress payments.

  2. (2)

    However, the FCA reiterates the expectations set out in its Dear CEO Letter dated 31 March 2022 for these firms. To ensure that they have adequate financial resources, out-of-scope firms should continue to retain assets so that they can meet costs arising in connection with any BSPS redress. A copy of the FCA’s Dear CEO Letter is available here: https://www.fca.org.uk/publication/correspondence/british-steel-pension-scheme-consultation-redress-scheme.pdf

  3. (3)

    The FCA reminds SMF managers at out-of-scope firms that they are personally accountable for breach of the conduct rules in COCON. For example, Senior Manager Conduct Rule 2 requires an SMF manager to take reasonable steps to ensure that the business of the firm for which they are responsible complies with the relevant requirements and standards of the regulatory system. SMF managers should take account of the expectations in the FCA’s Dear CEO Letter when complying with their regulatory obligations.

CONRED 3.1.6R

1For the purposes of this chapter, when determining whether it has provided BSPS advice, a firm must treat both of the following as having been provided by the firm:

  1. (1)

    any BSPS advice given by an appointed representative for which the firm has responsibility as principal; and

  2. (2)

    any BSPS advice given by another person for which the firm is liable (including any BSPS advice that gives rise to a contingent liability on the part of the firm).

CONRED 3.1.7G

1Under CONRED 3.1.6R(2), a firm will be treated as having provided BSPS advice if the firm has assumed liability for potentially unsuitable advice given by another person in relation to transfers of interests in the BSPS. This could arise, for example, where there has been a sale or other transfer of a client book to the firm and the terms of that sale or transfer have resulted in the firm assuming liability for the provision of BSPS advice by the original transferor.

Duration of application

CONRED 3.1.8R

1CONRED 3 applies until the end of 31 January 2023.