FCA bans 4 over ‘reckless’ pension transfer advice

The FCA has banned four financial advisers, three provisionally, over “reckless” pension transfer advice which has so far cost £13.4m in compensation payments. The watchdog said today it was banning two financial advisers and two partners at Chelmsford-based St Martin’s Partners LLP (SMP) from working in financial services, and collectively fining them £590,544. The regulator said it considered the four were responsible for a pension transfer advice model that put at risk people’s guaranteed retirement benefits. In connection with the matter, the FCA today published three decision notices and one final notice regarding the four: Adrian Douglas, Liam Martin, Frank Oxberry and Alec Cuthbert. Mssrs Douglas, Martin and Oxberry have referred their Decision Notices to the Upper Tribunal. Because of this the findings in the Decision Notices are provisional unless and until they are confirmed. The proposed action outlined in their Notices will have no effect pending the determination of the Tribunal, the FCA said. The FCA has provisionally fined Mr Oxberry £241,869, Mr Martin £128,356 and Mr Douglas £128,356 and provisionally banned them from working in financial services. The three have referred the FCA’s decisions to the Tribunal. Mr Cuthbert has been fined £91,963 and banned from working in financial services. Mr Cuthbert agreed to settle his case and has not referred the FCA’s decision to the Tribunal. SMP is now in liquidation. To date, the Financial Services Compensation Scheme (FSCS) has paid over £13.4m in compensation to SMP’s clients as a result of losses suffered following advice they received. The FCA said that between October 2015 and July 2016, SMP’s advice put 547 customers at significant risk of transferring out of guaranteed defined benefit pensions into investments which were unlikely to be suitable for them, including investments in hotel developments in Cape Verde offered by The Resort Group Plc. Many customers were brought to SMP by ‘introducer’ firms, including First Review Pension Services Ltd (FRPS), a subsidiary of The Resort Group. The FCA said in its view, SMP had “clear indications” of the link between FRPS and The Resort Group. The FCA said it believed SMP’s 'advice model' did not take into account the information required to assess the suitability of a pension transfer or how the benefits of the customer’s existing scheme compared to the new investment. It said SMP did not intend it to. Adrian Douglas and Liam Martin, both qualified pension advisers, played important roles in designing and operating the transfer advice model used at the Essex-based firm, said the watchdog. SMP’s two partners, Mr Oxberry and Mr Cuthbert, had oversight of the firm and its advisers. They did not ensure that due diligence was carried out on either FRPS or at least 16 other introducer firms involved in the model, the FCA alleged. A requirement was agreed in November 2016 that stopped SMP using the advice model. Therese Chambers, joint executive director of enforcement and market oversight, said: “People need to be able to trust the advice they receive about their pensions. But these four individuals put SMP’s customers in danger of giving up guaranteed retirement income for high-risk investments, like overseas hotel developments. They received significant financial benefit in doing so, at the expense of their customers. “There was a reckless disregard for customers’ financial situation, their needs through retirement and how their existing benefits compared to the proposed alternative. It is right the FCA takes steps to prevent these people from working in the financial industry and impose penalties.”

FCA bans 4 over ‘reckless’ pension transfer advice

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