FCA provisionally fines 'seriously incompetent' financial adviser nearly £1.3m

The Financial Conduct Authority (FCA) has provisionally fined a financial adviser nearly £1.3m (£1,284,523) over "seriously incompetent" defined benefit (DB) transfer advice given to around 422 clients, including 183 steelworkers.

The regulator has also provisionally banned the adviser from performing any senior management function in relation to regulated activities carried on by an authorised person, exempt person or exempt professional firm, and from advising on pension transfers and opt outs.

The FCA's Decision Notice stated that the former adviser, Geoffrey Edward Armin of Retirement and Pension Planning Services (RPPS), had advised on pension transfers to the total value of £125m, with an average transfer value for customers of approximately £298,000.

This related to around 422 members, including 183 members of the British Steel Pensions Scheme, 174 of whom agreed to transfer out of their scheme following Armin's recommendation, representing £74m of the total value of transfers.

However, the regulator found that Armin was "seriously incompetent" when advising on DB transfers, breaching both Statement of Principle two and Statement of Principle seven.

In particular, the FCA alleged that Armin failed to obtain the necessary information required to assess the suitability of a pension transfer for a customer, and also disregarded information including customers’ financial situation, income needs throughout retirement, and how their existing pension benefits compared to the proposed alternative.

It also stated that, in some cases, Armin only informed customers of the consequences of their decision to forego the valuable guaranteed benefits offered by their DB pension after they had already transferred out of the scheme.

Based on its charging model, RPPS received £2.2m in fees for all DB pension transfer advice, around 55 per cent (£1.2m) of which was retained by RPPS and Armin.

Considering this, the FCA argued that Armin received a “significant financial benefit” from the advice provided on DB transfers, with the provisional fine therefore aiming to seek to remove the benefits received.

Armin has referred the case to the upper tribunal for review, however, with the findings of the FCA's Decision Notice therefore provisional, as the Upper Tribunal will determine what, if any, is the appropriate action for the FCA to take.

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