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October 4, 2023

FCA bans pension Adviser over ‘grossly negligent’ transfer advice

The Financial Conduct Authority (FCA) has banned an Adviser for failures in the pension transfer advice he gave to British Steel Pension Scheme clients.

Simon Hughes of S&M Hughes Limited has been banned by the FCA from advising customers on pension transfers and pension opt outs. He is also banned from holding any senior management function in a regulated firm.

The Regulator also ordered him to pay £158k to the Financial Services Compensation Scheme (FSCS) to contribute to the compensation owed to his clients.

FSCS Claims against S&M Hughes Limited

The FSCS has, to date, paid out over £8.4 million in compensation to Mr Hughes’ clients for the unsuitable advice they received.

The FCA said the amount of compensation would’ve been £10,482,437 had it not been for the FSCS’ £85k compensation limit.

This means some clients will have uncompensated losses to their pension funds.

Out of a total of 287 customers, 232 were advised to transfer out of their defined benefit pension scheme between April 2015 and May 2019. This includes 188 British Steel Pension Scheme clients.

British Steel clients were ‘particularly vulnerable’

In his role as pension transfer specialist and financial adviser, the FCA said Mr Hughes “was solely responsible for the pension transfer advice provided by the firm.”

Therese Chambers, the joint director of Enforcement and Market Oversight at the FCA, added: “The decision to transfer out of a DB pension scheme is a potentially life changing one and it’s vital that customers get suitable advice. Mr Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided.

“BSPS customers were particularly vulnerable, and Mr Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.”

FCA guidance states that, as a starting point, it should be assumed that such transfers “are not in customers’ best interests.”

The FCA statement said: “Mr Hughes did not have a reasonable understanding of the alternative options available to BSPS customers and gave undue weight to the customers’ stated desire to transfer their pension.”

It added: “He also failed to obtain the necessary information relating to the customers’ financial situation and failed to properly assess whether customers would be reliant on the income from their DB pension and whether they could bear the risks associated with a pension transfer. He also recommended transfers to customers without adequately considering if the transfer met the customers’ stated objectives.”

S & M Hughes Ltd, which also traded as Crescent Financial, was made to cease all regulated activity by the FCA in May 2019.

The firm entered liquidation in September 2019 and was declared in default by the FSCS on 14 August 2020.

Important Information!

You are not required to use our services to pursue your claim. You can also seek further advice or shop around subject to any time limits within which a claim must be made.

It is possible for you to present the claim for free, either to the firm or person against whom you wish to complain or to the statutory ombudsman (Financial Ombudsman Service or Pension Ombudsman Service) or the Financial Services Compensation Scheme, whichever is applicable to your claim.