FCA Bans and Fines Pension Advisers £590,544 for Risky Pension Transfer Advice

Facts

As a result of its investigation, the FCA determined that the four employees in question had put 547 customers pensions at significant risk between October 2015 and July 2016. 

Mr Douglas and Mr Martin, both qualified pension advisers, had advised these customers to transfer their guaranteed defined benefit pensions into high-risk investments which were likely to be unsuitable for the individuals’ financial requirements. These high-risk investments, which included hotel developments in Cape Verde offered by The Resort Group Plc, failed to take into consideration individual customers financial situations hence putting them in a detrimental financial position when they came to rely upon their pension. 

The 547 customers impacted by SMP’s advice model were brought to the firm through 17 ‘introducer’ firms. These introducer firms included First Review Pension Services Ltd (“FRPS”) which is a subsidiary of The Resort Group Plc. The FCA deemed that there was a clear link between FRPS and The Resort Group Plc and that SMP had a clear indication of this link.

Mr Oxberry and Mr Curthbert, both partners at SMP, failed to ensure that SMP’s model took into consideration the information required to assess the suitability of a pension transfer or how a customer’s existing scheme compared to the new investment. SMP’s model did not do this and accordingly neither Mr Oxberry nor Mr Curthbert carried out the required due diligence before the transfers were made. 

In November 2016, a requirement was agreed with the FCA that prevented SMP from using this advice model any further. 

Decision 

On 19 March 2024, the FCA fined Mr Oxberry £241,869, Mr Martin £128,356, and Mr Douglas £128,356. All three SMP employees were banned for life from working in financial services. All three have referred their FCA decisions to the FCA’s Upper Tribunal.

Mr Cuthbert was further fined £91,963 and banned from financial services but has chosen to settle his case rather than refer it as the other three employees have done. 

In addition, SMP is now in liquidation and compensation in excess of £13.4million has been paid to SMP’s clients by the Financial Services Compensation Scheme.

Comment

Garon Anthony, Financial Services Partner comments:

“The FCA’s decision is a clear reminder to the industry that the FCA is still very much focused on ensuring that people can trust the advice they receive about their pensions, especially when it comes to defined benefit scheme transfers, and weeding out those bad advisers who disregard their customers’ financial situations and needs through retirement so as to make a fast buck.”