On 3 March 2021, the FCA issued a statement confirming that it will amend Finalised Guidance 17/9: Guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers (FG17/9).
In FG17/9 the FCA sets out guidance for firms on how to calculate redress for unsuitable defined benefit (DB) transfers. It refers to both the retail prices index (RPI) and the Consumer Prices Index (CPI), an alternative inflation measure.
In the November 2020 Spending Review, the Government announced changes to the way that the RPI inflation measure is calculated from February 2030.The RPI change means that from February 2030 the -1% adjustment to the RPI assumption used in FG17/9 to calculate the CPI assumption will not reflect the assumed difference between the RPI and the CPI. It will be too large and some consumers may not receive the correct amount of redress. In light of this the FCA states that it intends to update the CPI adjustment by mid-March 2021 and will do so without prior consultation. It will backdate the change to 25 November 2020 and it applies to all calculations carried out from that date.
The statement also sets out what firms should do whilst it is updating FG17/9. The FCA sets out certain actions that apply to calculations of pension transfer redress offers that have been done in accordance with FG17/9 on or after 25 November 2020. For example, in relation to consumer complaints, reviews of past business by the firm, and complaints made to the Financial Ombudsman Service. They apply regardless of whether a redress offer has already been settled with a consumer, including on a ‘full and final settlement’ basis.