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January 12, 2024

FCA issues warning to unnamed adviser over DB transfer advice

An Adviser has been issued with a warning notice from the Financial Conduct Authority (FCA) concerning advice given to clients to transfer out of their Defined Benefit pension.

The warning notice states that between 2 April 2015 and 25 June 2019 the individual, who was not named, had advised a large number of customers to transfer out of their Defined Benefit pension scheme into an alternative pension arrangement.

This was despite FCA guidance which “created a presumption of unsuitability” in respect of transferring out of Defined Benefit pension schemes.

During the period mentioned the FCA said the individual acted as a CF30 (Customer) and Pension Transfer Specialist at the firm. Adding that they were also approved to perform both Director and Compliance Oversight functions.

The FCA said that it considers that the individual “breached Statement of Principle 1 of the FCA’s Statements of Principle for Approved Persons when carrying out their controlled functions.”

It added that the individual was “reckless” and “acted without integrity” because they made Personal Recommendations despite having failed to obtain adequate information from clients.

This was information relating to their financial situation, such as current expenditure details. The FCA added that the individual had also failed to “adequately assess customers’ attitudes to investment and transfer risk.”

Something that’s necessary in order to properly assess the suitability of transferring out of a Defined Benefit pension scheme.

Failure to provide sufficient information

The FCA warning also stated that the Adviser had “approved Suitability Reports which failed to provide their customers with sufficient information.” Information that would enable clients to make an informed decision about whether to complete the pension transfer.

The Regulator commented: “This was despite knowing that each of these steps was a necessary prerequisite to providing a Personal Recommendation.”

Additionally, during the Relevant Period the FCA said that the individual breached Statement of Principle 4.

Clarifying that they acted “dishonestly in relation to their financial affairs, agreed a settlement in respect of the dishonest conduct and failed to notify the FCA “

FCA Warning notice – significant risk of unsuitable advice

The notice concluded that the FCA considers that the failings meant that the advice provided, both by the individual and the firm “..did not comply with regulatory requirements and standards”.

And created a “significant risk that the advice that a customer should transfer out of their DBPS would not be suitable for them.”

The warning notice, which was issued in November is not the final decision of the FCA. The individual has the right to make representations to the Regulatory Decisions Committee (RDC) which will decide on the appropriate action and whether to issue a decision notice.

If a decision notice is issued, the individual has the right to refer the matter to the Upper Tribunal. It would reach an independent decision on any appropriate action the FCA should take.

Think you may have received unsuitable Defined Benefit pension transfer advice?

Unsuitable Defined Benefit pension transfer advice is sadly more common than you may think.

If you have concerns you may have been given unsuitable pension transfer advice it’s important to take action.

If you’d like some help – we can assess your case and tell you if we think you may have grounds to pursue a claim.

Our initial assessment is free, totally confidential and there’s no obligation to use our service.

Call or fill in the contact form to arrange an assessment at a time that suits you.

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.