The FCA has fined financial advice firm, LJ Financial Planning Ltd (LJFP) £107,200 for providing its customers with “unsuitable pension switching transfer advice” and “failing to manage its conflicts of interest”.
According to the authority between March 2010 and December 2012, the Warrington-based firm recommended that 114 customers transfer their pensions into self-invested personal pensions (SIPPs), without “providing any advice on the underlying investments which were to be held in those SIPPs”.
It is believed that these investments were often high-risk, esoteric and illiquid, with the total amount invested in this way by LJFP’s customers at just over £6m.
The FCA also reported that LJFP failed to “take reasonable care to ensure the suitability of its advice” for customers, who were considering whether to transfer their existing pensions into a SIPP and who “ought to have been able to rely upon its judgment in relation to the suitability of this transfer”.
To date, LJFP has paid redress of £2.6m to 41 customers who have been impacted by this failing. It is said LJFP will be conducting a “customer contact exercise” in relation to the remaining customers in order to assess their eligibility for redress.
Mark Steward, executive director of enforcement and market oversight, said: “Investors should be able to trust their financial advisers with the pension contributions they’ve built up over a lifetime of hard work.
“These failings were especially serious because LJFP facilitated the transfer of these investors’ pensions into high-risk investments without assessing whether the investments were suitable for investors.”
He added: “In many instances, these investments are now worthless and many investors are approaching or already in retirement and so especially vulnerable to the risk of significant losses.
“Redress is important but these investors should never have been placed in this position in the first place. Investors should also be able to rely on their financial advisers to manage conflicts fairly and to disclose them so investors are able to make better informed decisions.”