The Financial Conduct Authority (FCA) has set out its plans for a British Steel Pension Scheme (BSPS) redress plan totalling £71.2m.

In a consultation, released on Thursday 31 March, it said firms involved in BSPS transfers would be required to review the advice they gave, identify if it was unsuitable, and calculate and pay redress to consumers where required. It said the scheme will apply to 343 advisory firms.

It said: "BSPS is a highly exceptional case. Our evidence, suggests 46% of transfers were unsuitable.

"This suggests much higher levels of poor advice compared with that we have seen in higher-risk firms in non-BSPS pension transfer cases (17%)."

The FCA projected estimate the proposed scheme would mean that 1,400 BSPS members receive £71.2m in total redress.

"That is £56.1m more than if we simply continued with our current supervisory and enforcement work to ensure that BSPS members who received unsuitable advice receive any redress they might be owed," the regulator said.

The consultation, Consumer redress scheme for unsuitable advice to transfer out of the British Steel Pension Scheme, described the scandal as a "unique" failure in advice that resulted in around 8,000 BSPS members transferring out of a defined benefit (DB) pension and into a defined contribution (DC) scheme, such as a personal pension.

Sheldon Mills, executive director for consumers and competition at the FCA, said: "The circumstances around British Steel Pension Scheme transfers were exceptional, with former members receiving significantly higher levels of unsuitable advice compared with other cases. We want individuals who lost out financially after receiving unsuitable advice to receive compensation through our scheme."

The consultation paper set out the regulator's proposals for firms to review their advice and compensate consumers if the unsuitable advice caused them financial loss. It also explained proposals for safeguards, independent checks, and monitoring to ensure that firms comply with the scheme's rules and consumers can have confidence in its outcome.

The FCA also said it was "currently reviewing guidance for firms on how to calculate redress for unsuitable DB pension transfers".