An advice firm has been fined almost £900,000 by the Financial Conduct Authority over defined benefit pension transfers.
According to the regulator, Inspirational Financial Management poorly advised people to transfer out of defined benefit pension schemes, including the British Steel scheme.
The FCA has fined the firm, which is in administration, £897,840 and banned Arthur Cobill, an adviser at the firm, and William Hofstetter, one of the firm’s directors, from advising customers on pension transfers and pension opt outs.
Hofstetter has also been banned from holding any senior management function at any regulated firm.
Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said: "Pensions are the safety net people spend their lives building.
“For many customers, their DB pension was their most valuable asset, and it was their only retirement provision other than their state pension.
"As experienced advisers, Mr Cobill and Mr Hofstetter, and IFM should have known better than to unravel this.”
Cobill and Hofstetter agreed to pay £120,000 and £40,000, respectively, to the Financial Services Compensation Scheme to contribute to compensation for their former customers.
Between June 2015 and December 2017, the FCA said Inspirational Financial Management provided unsuitable pension transfer advice and failed to properly consider whether it would be in customers’ best interests to transfer out of their secure DB pensions.
The firm’s charging model meant they only collected fees when customers transferred out of their DB pension following their advice.
The FCA found 83 per cent of the pension transfer advice failed to comply with its minimum required standards and risked the long-term financial health of their customers.
Of the 307 customers advised to transfer out of their DB pension schemes, 261 completed the process.
Cobill advised 245 of those, including 198 members of the BSPS with pension benefits worth more than £90mn.
Hofstetter was responsible for the compliance oversight of the firm’s process for pension transfer advice.
The FCA said customers transferring out of the BSPS were already in a vulnerable position due to the uncertainty surrounding the future of their pension scheme.
Chambers added: “It is only right that Mr Cobill and Mr Hofstetter contribute towards compensating those affected.”
tara.o'connor@ft.com
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