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The FCA has fined Inspirational Financial Management Ltd (IFM) £897,840 for poorly advising people to transfer out of defined benefit pension schemes, including the British Steel Pension Scheme (BSPS).
This comes along with banning IFM’s adviser Arthur Cobill and director William Hofstetter 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.
Cobill and Hofstetter have agreed to pay £120k and £40k, respectively, to the Financial Services Compensation Scheme (FSCS) to contribute to compensation for IFM’s customers.
Between 8 June 2015 and 22 December 2017, IFM 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, according to the FCA.
It is understood that the firm operated a contingent charging model, only collecting fees if customers transferred out of their DB pension schemes following the firm’s advice.
A review by the FCA found that 83% of IFM’s pension transfer advice failed to comply with its minimum required standards, and customers risked financial loss as a result of the poor advice they received.
Out of 307 IFM customers advised to transfer out of their DB pension scheme, 261 completed the process. Cobill advised 245 of those, including 198 members of the BSPS. In total, the BSPS members advised by Cobill had pension benefits worth over £90m.
Meanwhile, Hofstetter was responsible for the compliance oversight of IFM’s process for pension transfer advice.
Therese Chambers, joint executive director of enforcement and market oversight at FCA, 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. It is only right that Mr Cobill and Mr Hofstetter contribute towards compensating those affected.”
Inspirational Financial Management Lds is currently in administration.
