Several recent cases have highlighted just how big a risk firms are taking should they choose to offer advice on complex retirement savings arrangements.
Firstly, the Financial Conduct Authority (FCA) has instructed Holborn Assets to cease all pension transfer business that was introduced by an overseas adviser until such time as a skilled person review of the firm’s pension advice process has been completed. The firm must also conduct a historic business review of all its previous pension transfer business, and while pension transfer business referred to Holborn by UK advisers can continue, these transactions must also be checked by a skilled person.
Holborn Assets global head office is in Dubai, but it’s UK operations are based in the Manchester suburb of Sale.
This follows a similar recent restriction placed by the regulator on DeVere, which was ordered to cease providing transfer value analysis reports to third parties.
In the case of both Holborn and DeVere, the FCA has not given any reasons for imposing the restriction, so it is unclear what the firms’ specific compliance failings are.
Meanwhile, the Financial Services Compensation Scheme has revealed that it has so far paid out more than £3 million in redress to 166 customers of advice firm Blueinfinitas. The Weston-super-Mare firm is now in liquidation, and has previously fallen foul of the Financial Ombudsman Service (FOS) regarding its advice for clients to transfer into Self Invested Personal Pensions (SIPPs) that involved investments in property.
Some claims management companies are becoming involved in the pensions advice arena, and are particularly active in pursuing claims on behalf of customers who were recommended SIPPs, when a regular personal pension may have been just as good, if not considerably cheaper.
Firms thus need to be confident that a SIPP is the best option for the client before recommending them. They must also note that they are responsible for ensuring that the underlying investments the SIPP contributions will be invested in are suitable.
SIPP complaint volumes are increasing, as is the proportion of complaints about this product being upheld by the FOS.
The Government also took action regarding overseas pensions in the recent Spring Budget. A new 25% tax charge was announced, targeting pension savers who seek to reduce their tax bill by moving their pension wealth overseas into Qualifying Registered Overseas Pension Schemes (QROPS).
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.