The financial regulator has said the total pay-out to British Steel Pensions Scheme members impacted by a mis-selling scandal is set to be more-than £20 million less than previously expected.

The Financial Conduct Authority (FCA) said more than 1,000 former British Steel Pension Scheme members are set to receive redress payments.

It said the bill to compensate workers will now be around £49 million. In March, it was estimated to cost slightly over £71 million.

Steelworkers impacted by the scandal will receive an average redress payment of around £45,000, compared with a previously predicted pay-out of £60,000.

The FCA said the reduction was because less money was needed to fund the compensation following an improvement in annuity rates.

The watchdog also said around 300 members originally expected to receive payments have made separate complaints and will therefore not be part of this compensation process.

The scandal dates back to 2017 and 2018 when members of the plan transferred defined retirement benefits to a riskier arrangement following a restructuring prompted by Tata Steel.

Around 54% of transfer recommendations by financial advisers were unsuitable, the FCA said, exposing members to losses in retirement funds.

Sheldon Mills, executive director for consumers and competition at the FCA, said: “’We have consulted widely on a redress scheme for British Steel Pension Scheme members.

We’re working to get the scheme in place quickly to end uncertainty for members

“We found that almost half the advice given to members was unsuitable – an exceptionally high level compared with other cases.

“Today we’re confirming the rules for the redress scheme, so that BSPS members can get the retirement they worked for.

“We’re working to get the scheme in place quickly to end uncertainty for members.

“We will be watching advisers closely and have put in place checks so that consumers can have confidence that they’re being treated fairly under the scheme.”