Defined BenefitFeb 9 2021

FCA launches court case against DB transfer adviser

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FCA launches court case against DB transfer adviser

The Financial Conduct Authority has launched High Court proceedings against Paul Steel and his partner over unsuitable defined benefit pension transfer advice.

The City watchdog has alleged that the firm Estate Matters Financial Limited, which is in liquidation, has “contravened various requirements under the Financial Services and Markets Act 2000” by providing unsuitable defined benefit pension transfer advice.

This had led to clients leaving their DB pensions when it was not in their best interests to do so. 

The FCA alleged that Steel, who was EMF’s director and co-owner, knew of those contraventions. 

As part of the court proceedings, an interim injunction has been secured which freezes the assets of Steel and his partner Jacqueline Foster up to the value of £7m, pending a further hearing. 

The Jacqueline Foster in this case is not Baroness Foster of Oxton, who is a Conservative politician and has no known links to the case.

The regulator also said that Steel had “breached FCA requirements by undertaking a course of conduct which resulted in the removal of EMF’s assets”.

This resulted in the firm being unable to meet potential liabilities for unsuitable advice, while enabling Steel to retain the “significant profits” that accrued from the provision of that advice, and from ongoing fees.

An injunction was obtained against Foster on the basis that she may be holding or controlling assets owned by Steel.

The FCA is asking the court to require Steel to compensate consumers who have suffered losses as a result of receiving unsuitable pension transfer advice. 

No trial date has been set.

The move is the latest in an ongoing crackdown by the FCA on unsuitable advice in the defined benefit market. 

Last year the regulator revealed hundreds of firms had quit the market following its intervention and warned too many firms were still failing to collect the necessary information to provide advice. 

The FCA also warned it had seen firm owners reducing financial resources by withdrawing assets or changing their corporate structure to avoid liabilities, and promised to take action where this could leave it unable to rectify poor advice.

In 2019 almost 80 per cent of advisers in the defined benefit market were probed about their transfer advice as part of the regulator's crackdown, with the watchdog writing to more than half of the 2,500 advice firms in the sector expressing concerns.

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