FSA prohibition action following failings in connection with pension transfers
1st May 2007The Financial Services Authority (FSA) today prohibited Ivan and Valerie Richards from performing certain controlled functions related to regulated activities.
The case relates to advice provided by Alexanders, an independent financial advice company, regarding the transfer of employees from membership of the final salary pensions of one manufacturing company to the group personal pensions scheme of another following a company takeover. Alexanders was a partnership in Swindon owned and managed by Mr and Mrs Richards.
The FSA took action as a result of serious systems and controls and oversight failures, which led to 650 people being exposed to the risk of significant financial loss arising from advice to transfer their pensions from deferred membership of a final salary scheme into a personal pension plan.
Mr Richards was personally involved in the failures at Alexanders, which included putting in place a flawed advisory process which led to the transfer of occupational pension benefits when this was potentially unsuitable for clients and exposed them to the risk of significant loss and detriment.
Mrs Richards was unclear as to her responsibilities as a partner of Alexanders. She failed to appropriately inform herself about the pension transfer business conducted by Alexanders and failed to take adequate steps to ensure that such business was conducted in a compliant manner.
Jonathan Phelan, FSA Head of Retail Enforcement, said:
"The transfer process advised upon and administered by Alexanders was fundamentally flawed as shown by the firm's failure to establish the overall attitude to risk of customers whose pensions were being transferred.
"The serious failing identified arose from a lack of control by the partners of Alexanders. In line with our consumer protection objective the FSA will ensure that individuals are prevented from holding significant controlled functions at firms where they do not have the necessary qualities to perform the role in question to the required standards."
Mr Richards is prohibited from giving pension transfer advice. Mrs Richards is prohibited from performing any significant influence controlled functions
Subsequent to the conduct described in the Prohibition Notices, Alexanders IFA Ltd became responsible for regulated business conducted by Alexanders and this firm is to undertake a past business review which will identify any instances of unsuitable advice and assess and determine appropriate compensation for loss arising from such advice.
