CompaniesAug 20 2014

Ashley Law could recover £1m+ from advisers after review

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National advice firm Ashley Law is to recover costs and compensation that could reach significantly in excess of £1m, following a four-year ‘skilled person’ review into pension transfers.

According to a letter by the firm sent to advisers, seen by FTAdviser, the then Financial Services Authority used its powers under section 166 of the Financial Services and Markets Act 2000 to order it in July 2010 to appoint an independent, authorised third party to carry out a review of past pension transfers.

It said close to 1,000 pensions were written during the period covered by the review, which was carried out by an independent third party to “ensure complete impartiality and transparency”.

Ashley Law’s letter details for individual advisers the outcome of the assessments. It also states the Financial Conduct Authority has directed it to write to clients to inform them of the outcome and pay redress where necessary. The firm will then seek to recover these costs from the advisers.

The letter states that in addition to the compensation, it will seek to recover the £800 plus Vat it negotiated as a flat fee for each file review with the independent third party.

One adviser who spoke to FTAdviser anonymously had 10 cases reviewed dating from between September 2006 and February 2009, with only two being assessed as ‘suitable’. In addition to one ‘unsuitable’ case and three ‘unclear’ cases not requiring compensation, he will need to pay out on the remaining four.

Including his ‘skilled person’ bill and compensation he is expecting to pay around £20,000, of which he will be paying all of it due to his professional indemnity insurance policy cover. The adviser has a £9,000 excess limit per case and anything below that has to be paid by the individual and everything above is met by the PI cover.

The adviser added that Ashley Law’s head office had confirmed around 250 of the 1,000 cases reviewed will give rise to compensation.

The adviser said that he felt the review wrongly put the onus on him to prove the advice was suitable rather than looking to see if there was evidence that it was unsuitable

He added: “The investigation was flawed. I believe Ashley Law is planning to send out compensation cheques this week.

“When I spoke to the FCA about this they said they were only the ones to instigate [the independent review], but I said they should be policing the sector and [that] this is a flawed investigation. They are not going to get a penny out of me until it has been reviewed.”

However, in a letter to advisers, signed by director Jock Cassidy, he says the use of the third party had “ensured complete impartiality and transparency”.

The adviser has urged all advisers at Ashley Law to contact their MP. He has complained to his own MP, who has written to FCA chief executive Martin Wheatley to raise concerns over how the decision to compensate was reached.

The MP has asked the FCA to provide a “full breakdown” of how the reviewer’s decisions were reached and what action it will take following on from her constituent’s complaint.

Ashley Law declined an invitation to comment.