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.
He said: "I can't think of a single aspect of it that conforms with the norm. The suitability report wasn't done properly, the fact finding wasn't done, the risk profiling wasn't done."
Mr Rush has criticised the Sipp provider’s decision to pay out.
He said: "Intelligent Money was aware that the service provided by Mr Reynolds [Active Wealth’s director] was, at best, sub optimal, given that it was aware of shortcomings surrounding Active Wealth.
"Given that it was aware of Mr Reynolds' history, there is nothing to prevent it from legitimately placing an invoice in 'dispute' if it feels there is merit in doing so. In addition to contract law, it has obligations to treat clients fairly.
"Knowing, as it did, that Mr Reynolds' service was not that which these steelworkers thought they were getting, it might be argued that fairness was conspicuous by its absence."
Active Wealth's liquidator, Tina Bullock at Crossfields, could not be reached for comment.
But Julian Penniston-Hill, chief executive at Intelligent Money, said his firm was obeying the law when it paid Mr Nicholson's fee.
He told FTAdviser: "Unfortunately the client had already authorised us to pay the adviser charging fees. It was not the case that we paid them because it was legal to do so, it was the case that we paid them because it was illegal for us not to do so."
Mr Penniston-Hill claimed his firm was the one which reported Active Wealth to the regulator, with his suspicions being "proven to be fully warranted".
He added: "The very last thing we would have wanted to do was forward any client agreed fees to the firm or its administrator.
"We were, however, left with no choice other than to follow the contractual instructions the client gave, despite the sour taste this left us with."
Mr Penniston-Hill has urged all clients, going forward, to notify the firm if they consider the advice they received was flawed.
"This way we can justify withholding adviser fees until a final decision on the matter has been received," he noted.
Philippa Hann, partner at Clarke Willmott – the firm appointed by a group of steelworkers to pursue a legal case against parties involved in the transfer debacle – explained that nobody has acted wrongly in this case.
She said: "It is unfortunate but an entirely normal way for the liquidator to behave.
"Of course what would have happened had Intelligent Money not simply paid the fee [and asked Mr Nicholson about it] is that he would have refused to pay it, on the basis that he suffered significant losses as the result of the advice he received from Active Wealth."
Ms Hann, who is representing Mr Nicholson, said she would inform the FSCS that he had an additional £1,500 removed and it would form part of his claim.
maria.espadinha@ft.com
