The FCA also found that the partners failed adequately to disclose a conflict of interest, as they were directors and shareholders of EGI, a firm that referred almost a quarter of 1 Stop’s Sipp customers during the relevant period.
For these referrals, EGI was paid a fee, meaning that Mr Rees and Mr Hughes were benefitting from both the fees paid by customers for the advice given by 1 Stop and also from the commission received by EGI.
Mr Rees and Mr Hughes, whose firm was located in Pembrokeshire, will be writing to all customers who are potentially affected to inform them of the outcome of the FCA’s investigation, and the FSCS’s ongoing work to establish whether redress may be due to some or all customers.
The final notice for Mr Hughes said: “The amount of any such liability is currently unknown but is being investigated by the FSCS.”
Tracey McDermott, FCA director of enforcement and financial crime at the FCA, said: “By enabling customers to invest in unregulated and often high risk products without assessing suitability, these men exposed customers to the risk of losing their hard earned pension funds.
“This was then compounded by the partners’ failure to ensure that their customers fully understood these risks”.