Credit, Collections & Insolvency News
The FinandilcConduct Authority (FCA) has fined Pembrokeshire Mortgage Centre Limited (PMC) (trading as County Financial Consultants) (in liquidation) £2,354,331 for unsuitable advice to consumers to transfer out of the British Steel Pension Scheme (BSPS) and other defined benefit (DB) pension schemes.
The FCA’s view is that most people should keep the guaranteed income provided by a DB pension. PMC advised 420 consumers, nearly two-thirds of whom were BSPS members, on whether to transfer out of their DB scheme. Overall, 93% were advised to transfer. PMC earned over £2 million in transfer and ongoing advice fees.
Many of the people advised were in a vulnerable position due to the uncertainty surrounding the future of BSPS and the short timescale they had to make a decision. However, they did not receive the quality of advice they needed to make an informed decision.
They needed clear, objective and expert advice. Instead, PMC gave unsuitable advice in 60% of cases, even higher than BSPS as a whole.
Mark Steward, Executive Director of Enforcement and Market Oversight, said “Pembrokeshire Mortgage Centre advised hundreds of consumers to give up valuable defined benefit pensions without any adequate justification or rationale, using generic, templated advice not tailored to the specific circumstances of their customers while earning fees in doing so.”
“The quality of advice seen here was woeful. The failings were particularly egregious in the context of the British Steel Pension Scheme, where customers were in an unusually vulnerable position. The FCA’s investigation into the involvement of others in these matters remains ongoing.”
“Any consumers who were advised to transfer should contact the Financial Services Compensation Scheme to see if they are owed redress.”
The failings included the provision of generic suitability reports that were not tailored to the circumstances of individual consumers and contained contradictory, misleading and confusing statements. PMC also failed to have adequate resources to deal with the increase in cases caused by BSPS, further impacting the quality of advice provided.
Many consumers were advised to transfer out even though they were relying on the guaranteed income to fund their retirement and could not afford to bear the risk of transferring out. This included those who needed the money to provide for dependents needing long-term care.
PMC is currently in liquidation. The FCA will give preference to creditors (some of whom may be consumers), ahead of its financial penalty, to maximise funds available for redress.
