The Financial Conduct Authority has banned Simon Hughes of S&M Hughes Limited from advising on pension transfers and opt outs, and from holding any senior management function in a regulated firm.
S&M Hughes Limited is in liquidation and Hughes has been ordered to pay £158,600 to the FSCS to contribute to the redress due to his customers, most of which were members of the British Steel Pension Scheme.
The FSCS has so far paid out more than £8.4mn in compensation to Hughes’ customers for the unsuitable advice they received.
The FCA said Hughes was solely responsible for the pension transfer advice provided by the firm in his role as pension transfer specialist and financial adviser.
Between April 2015 and May 2019, 232 out of a total of 287 customers were advised to transfer out of their defined benefit pension scheme, including 188 BSPS members.
This is despite FCA guidance stating that advisers should start from the assumption that DB transfers are not in customers’ best interests.
Therese Chambers, joint director of enforcement and market oversight at the FCA, said: “The decision to transfer out of a DB pension scheme is a potentially life changing one and it’s vital that customers get suitable advice.
“Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided.
“BSPS customers were particularly vulnerable, and Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.”
The City watchdog said Hughes did not have a reasonable understanding of the alternative options available to BSPS customers and gave undue weight to the customers’ stated desire to transfer their pension.
The regulator also alleged he failed to obtain the necessary information relating to the customers’ financial situation and failed to properly assess whether customers would be reliant on the income from their DB pension and whether they could bear the risks associated with a pension transfer.
Hughes recommended transfers to customers without adequately considering if the transfer met the customers’ stated objectives.
The FCA said he failed to act with due skill, care and diligence and any customers who were advised to transfer by S&M Hughes Limited should contact the FSCS to see if they are owed compensation.
sonia.rach@ft.com
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