FSCS bill for two pension advice firms hits £6m

FSCS bill for two pension advice firms hits £6m

The Financial Services Compensation Scheme has paid out more than £5.7m in respect of bad pension advice given by two firms, with many more claims expected.

The investor lifeboat fund paid out on claims against Financial Page and Henderson Carter Associates, which entered administration in July 2014 and February 2010 respectively.

The payments relate to pension switching advice to invest in the Aigo fund through self-invested personal pensions (Sipps) but the companies advised on investments in at least two more funds that the FSCS is concerned about.

Investor information published on the Mauritian stock exchange in 2013 described the Aigo fund as a protected cell company with limited liability, invested in natural resources and managed by Fidelis Global Asset Management Limited.

In the Financial Conduct Authority register listing for Financial Page, it mentions Hennessey Jones Bonds, alongside the Aigo fund, as a non-standard investment the advice firm is no longer permitted to put client assets into.

The FSCS is also expecting to pay out in relation to business written by a separate advice firm, Bank House Investment Management, which was declared in default in April 2017.

The firm has received no claims in relation to the Aigo fund but is believed to have facilitated pension switching into the other two funds being investigated by the FSCS.

According to FCA data from December 2016 the total value switched by Bank House was £2.65m.

The FSCS has paid out on 215 claims related to Financial Page to date and is processing a further 35 claims against the firm.

It has settled 120 successful claims against Henderson Carter, with a further 15 in progress. 

In total, 155 claims in relation to Financial Page and Henderson Carter and the Aigo fund were rejected by the compensation scheme.

Costs on the industry related to bad investments in Sipps have risen exponentially in recent years. 

In January the FSCS revealed plans to up the amount it levies from the industry by £16m, to £336m, based on mounting Sipp claims.

In its latest plan and budget the FSCS said it would levy the maximum amount possible against life and pension advisers for the fourth consecutive year and the retail pool - which allows for cross-subsidisation of levies when the limit for a single class is reached - would be triggered for the third year in a row.

All three advice firms have had their pension advice business restricted by the Financial Conduct Authority. 

The regulator had concerns the firms were linked to several introducer firms.

A note on the FCA register about Financial Page said: “Information has been provided to the FCA which has given rise to serious concerns with respect to the adequacy of the firm's pensions advice, including, but not limited to its relationship with Hennessy Jones Limited ("HJ Limited") (an Introducer Appointed Representative ("IAR") of the Firm).”

On Henderson Carter, the regulator stated it had concerns about its dealings with introducer Holistic Wealth Management, City Administration Limited, as well as Hennessy Jones, in respect of business carried out between December 2013 and March 2015.