A steelworker who is seeking redress from the Financial Services Compensation Scheme for the unsuitable advice given to him on his pension, has been forced to pay for the advice retrospectively, despite the advice company having entered liquidation.
Mark Nicholson, a former member of British Steel Pension Scheme, was advised by Active Wealth to transfer out his pension to a self-invested personal pension with Intelligent Money in 2017.
In February 2018 Active Wealth entered liquidation after it had been told to cease all pension transfer activity by the Financial Conduct Authority months earlier.
But it was not until March 2018 that a £1,500 advice fee left Mr Nicholson's account, the steelworker said.
He claimed the payment, which was for the pension transfer advice, was made two weeks after he had received a letter from the Sipp provider saying that due to the advice company's collapse and the Financial Conduct Authority investigation they weren’t working with Active Wealth anymore.
Mr Nicholson told FTAdviser: "Once we found out we had been very wrongfully advised - this was December 2017 - and the potential charges I was going to be exposed to, I made the decision to contact Intelligent Money and explain that I wanted to disinvest my funds."
Mr Nicholson said he only noticed in the summer, when he received a statement from Intelligent Money, that £1,500 had been taken out.
He said: "I made some inquiries and I found out that Intelligent Money had paid the £1,500 transfer fee to Active Wealth on March 15, 2018. For some reason the transfer fee hadn't been taken from my account in October 2017."
Mr Nicholson said he found it disgraceful that money had been taken from his account to pay a firm that was no longer trading and which had been found by the regulator to have given people like him bad advice.
He said: "From a legal point, they are probably right, because a fee should have been paid in the first place in October 2017, and for some reason it wasn't.
"I only noticed by accident. I've asked for the money back, I told them that what they have done was wrong, and they said for me to go chase Active Wealth.
"I think it is a disgrace that the Sipp company decided to pay the money after they tell us they're not going to deal with Active Wealth anymore."
FTAdviser reported last week (February 19) that the liquidator of Active Wealth was able to recoup an additional £24,150 from the firm’s clients after chasing them for outstanding advice fees.
Active Wealth was one of 10 firms which stopped giving transfer advice after they were identified as key players advising members of the BSPS to transfer out of their defined benefit pensions.
FTAdviser reported in 2017 that Active Wealth was working alongside unregulated introducer Celtic Wealth Management & Financial Planning, which referred the clients to the adviser.
Alastair Rush, principal at Rutland-based Echelon Wealthcare, who created Operation Chive - Counselling, Help, Information, Volunteer Exchange – to provide free counselling to steelworkers, has analysed Mr Nicholson's file, who is waiting for a response from the FSCS.