18Aug

The Financial Conduct Authority has announced its intention to ban and fine an adviser over alleged failings when giving pension transfer advice.

The individual has announced his intention to appeal to the Upper Tribunal but, unless the appeal is successful, he will be banned from both carrying out senior management functions and from giving advice on pension transfers and opt outs. He will also be fined £1,284,523.

The adviser, the sole director of a Barnsley-based firm, gave advice to 422 individuals who were members of final salary schemes. 183 of these were members of the British Steel Pension Scheme, and 174 customers were advised to transfer out of this scheme.

The FCA says his behaviour was “seriously incompetent” and that he breached two of the Statements of Principle for Approved Persons:

Principle 2: conducting business with due skill, care and diligence

Principle 7: taking reasonable steps to ensure that the firm complied with relevant regulatory requirements and standards.

The regulator says that, in some cases, he only informed customers of the disadvantages of transferring after the switches had been completed. He also failed to gather sufficient information regarding:

  • The clients’ financial situation
  • Their income needs throughout retirement
  • How the existing pension benefits enjoyed by the clients compared to the proposed alternative pensions – for example a Transfer Value Analysis Report or similar was only obtained for 17 of the 30 files reviewed by the FCA

The Final Notice adds that many of his suitability letters contained so many caveats that there was a risk of these contradicting the advice he had given to transfer; and that no independent compliance checks were carried out on any of the files.

The size of the fine was calculated as the amount of financial gain the adviser received from his transfer advice activities.