The Financial Conduct Authority has moved to fine and ban two advisers for their roles in operating a flawed pension advice process which led to 99 per cent of clients being recommended to transfer.
Toni Fox and David Price, former directors of CFP Management, have been banned from carrying out any regulated activity and were fined £681,536 and £632,594, respectively.
The FCA said their roles in the pension advice process risked people receiving unsuitable advice to transfer out of defined benefit pension schemes.
But Fox and Price have both referred the decision notices to the Upper Tribunal where they will present their case.
Any FCA rulings are therefore provisional and the Upper Tribunal will determine what action, if any, is appropriate.
Between April 21, 2015 and October 31, 2017, CFP, through its appointed representative, gave advice on 1,470 transfers worth more than £392mn.
Fox designed the pension transfer model and signed off on almost all of the advice.
As directors of CFP, Fox and Price had oversight of the operation of the pension transfer model.
The regulator alleged that more than 99 per cent of the advice was to transfer despite FCA guidance being that there should be a presumption against transferring.
More than 90 per cent of the transfers did not comply with FCA rules.
Of those advised, 33 clients were members of the British Steel Pension Scheme.
Despite both having 30 years’ experience in the pensions industry, the FCA said Fox and Price provided advice without proper consideration of clients’ financial circumstances and objectives, attitude to risk and capacity for loss.
The City watchdog said the business model they designed and operated gave rise to a significant risk that many clients transferred out of their DB pension when it was not suitable for them to do so.
CFP received a fee of between £1,500 and £20,000 from each client they advised to transfer and charged £500 when they recommended against transfer.
The FCA said both individuals made substantial gains from this business - Fox received £473,289 by way of salary, dividends and pension contributions from CFP and Price made £439,302.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: "Fox and Price’s misconduct meant that customers did not receive the advice they needed when trying to secure comfort and peace of mind for their retirement.
"Despite having a wealth of experience in the industry, they both oversaw and designed a deeply flawed advice model that was little more than a machine to churn out recommendations to transfer, placing people’s hard earned retirement money at risk."
sonia.rach@ft.com
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