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Network failures blamed for 'widescale phoenixing'

He said: "Some firms involved in DB pension transfers could find themselves being ‘self-insurers’ at renewal, so all advisers need to be alert to the risk of PII being an annually renewable insurance, not unlimited for time and memorial as regulated advice is."

According to the FCA, its concerns around deliberate phoenixing comes down to advisers causing consumer or peer detriment.

On its website, it points to its three main concerns: 

  • Poor advice that causes consumers to invest in unsuitable high-risk products that lead to financial loss.
  • Financial advice firms’ non-payment of redress awarded by the Financial Ombudsman Service, which might also include the need for consumers to make a claim to the Financial Services Compensation Scheme.
  • Financial firms or individual advisers re-entering the financial advice sector having previously avoided liabilities to consumers.

A spokeswoman for the FCA said: "It is unacceptable for regulated firms and individuals to seek to avoid liabilities to consumers that have arisen as a result of the poor advice they have given. We have a broad programme of work under way to tackle the harm it causes to consumers."

Find out more

How is the FCA working with the industry, government bodies and other regulatory organisations to prevent phoenixing? Read this month's Money Management feature 'Ashes to Ashes: how to stop phoenixing' on FTAdviser