A former financial adviser has been fined and banned from holding a senior position in financial services by the Financial Conduct Authority (FCA) after giving customers "grossly negligent" pensions transfer advice. Simon Hughes of S&M Hughes Ltd, which is now in liquidation, has been ordered to pay £158,600 to the Financial Services Compensation Scheme (FSCS) in redress to his customers, most of which were members of the British Steel Pension Scheme (BSPS).
The FSCS has so far paid out over £8.4 million in compensation to Mr Hughes’ customers for the unsuitable advice they received. Mr Hughes has also been banned from advising customers on pension transfers and pension opt outs, and from holding any senior management function in a regulated firm.
The former adviser was solely responsible for the pension transfer advice provided by the firm in his roles as pension transfer specialist and financial adviser. Between April 2015 and May 2019, 232 out of a total of 287 customers were advised to transfer out of their defined benefit pension scheme, including 188 BSPS customers. This is despite FCA guidance stating that, as a starting point, it should be assumed that such transfers are not in customers’ best interests.
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The FCA said Mr Hughes did not have a “reasonable understanding of the alternative options available to BSPS customers” and gave “undue weight to the customers’ stated desire to transfer their pension”. As a result, the FCA found that he failed to act with due skill, care and diligence.
Mr Hughes was found to have failed to obtain the necessary information relating to the customers’ financial situation and failed to properly assess whether customers would be reliant on the income from their DB pension and whether they could bear the risks associated with a pension transfer. He also recommended transfers to customers without adequately considering if the transfer met the customers’ stated objectives.
Therese Chambers, joint director of enforcement and market oversight at the FCA said: “The decision to transfer out of a DB pension scheme is a potentially life changing one and it’s vital that customers get suitable advice. Mr Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided.
“BSPS customers were particularly vulnerable, and Mr Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.”
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The FCA said any customers who were advised to transfer by S&M Hughes Limited should contact the FSCS to see if they are owed compensation.
Another adviser Darren Reynolds has also been fined £2.2m for dishonestly advising 670 customers, including 150 steelworkers, which the FCA said was one of its “worst cases”. Around 8,000 海角视频 steelworkers moved £2.8bn from their pension plan following its restructure in 2017.