The FCA has banned Nigel Lewis and Susan Jones of West Wales Financial Services from advising on pension transfers and pension opt outs after it found the advice they gave was “incompetent”.
Lewis has also been banned from holding any senior management functions in a regulated firm.
Lewis and Jones will pay £26,800 and £40,888, respectively, to the Financial Services Compensation Scheme to contribute towards the compensation owed to WWFS customers.
As of November 21, the FSCS has paid out £758,725 in compensation to customers of Llanelli-based West Wales Financial Services, which is in liquidation.
But the FCA said had it not been for the FSCS compensation limit of £85,000, the total compensation available to customers would have been £972,197.
The FCA said that between March and December 2017, WWFS provided unsuitable pension transfer advice.
According to the FCA, Jones advised 27 of 28 customers to transfer out of their defined benefit pension scheme, 25 of whom were members of the British Steel Pension Scheme.
In total, £9,769,550 of pension funds were transferred to defined contribution schemes.
The firm is a short distance from the Tata steelworks and during this period the firm had seen its volume of DB transfer business increase dramatically.
By August 2017, 98 per cent of its business was DB transfers and Lewis told the FCA that by September he, in his capacity of compliance oversight, was reviewing ten files every week, with each file taking him two to three hours to complete, and that he was working regularly at weekends in order to do so.
Lewis had no hand in designing the advice process itself and was not a pension transfer specialist.
The FCA intervened in December 2017 and stopped WWFS from processing transfers for a further 141 customers, all of whom were members of the BSPS.
The regulator said had it not been for the its intervention, these customers may have transferred out funds totalling £43,722,771.
It found that Lewis, in his compliance function, failed to take reasonable steps to ensure each of the pension transfer specialists working for the firm obtained the necessary information about the customer.
It also found Jones based her recommendations on the incorrect assumption that a transfer to meet a customer’s stated objectives was in the customer’s best interests and failed to assess whether the customer had the necessary attitude to
risk.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Mr Lewis and Ms Jones performed a double act of carelessness and incompetence that put people’s hard-earned pensions at risk.
“They would have continued to provide bad advice to many more had it not been for the FCA’s timely intervention. People need someone they can trust to give them informed advice on their financial future - and it’s not these two.”
amy.austin@ft.com
