Defined BenefitJun 26 2019

LV stops payments to suspended IFA

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LV stops payments to suspended IFA
ByMaria Espadinha

Pension provider LV has stopped payments of ongoing advice fees to Swansea-based firm S & M Hughes Limited, which trades as Crescent Financial, FTAdviser can reveal.

Among the company's clients are people who transferred out of the British Steel Pension Scheme to defined contribution plans with LV.

S & M Hughes was told to cease all regulated activities by the Financial Conduct Authority, effective on May 31.

Alastair Rush, principal at Echelon Wealthcare, who has been involved in helping steelworkers with their pension decisions, said he met with one steelworker today (June 26) who was a client of Crescent Financial who questioned if he was still paying for a service that he was no longer able to receive.

A spokesperson for LV said: "Our normal practice is to stop paying fees to an adviser when they cease regulated activities."

FTAdviser understands the ongoing advice fees, which are paid quarterly and are due at the end of this month, will only be paid up until May 31.

FCA rules indicate a company which can’t provide ongoing advice cannot continue to be remunerated.

Mr Rush said: “It’s vital that no steelworker compromises their ability to have access to good advice before they make well informed decisions about what to do with their pension. These men went from a safe defined benefit environment into a DC one which, as they are finding, can be perilous and they are having to make decisions that they are poorly equipped to make.

“They must take good quality legal and financial advice before they take any decisions. The FCA is in town this Friday at the Baglan Community Centre and I would urge as many steelworkers as possible to attend either the morning or afternoon session."

Members of the BSPS were asked to decide what to do with their pensions as part of a restructuring process in 2017.

As a result about 8,000 members transferred out of the old scheme by October last year, with transfers collectively worth about £2.8bn.

But concerns about the suitability of the transfers were soon raised leading to an intervention from the FCA, which resulted in 10 firms - the key players in the debacle - stopping their transfer advice service.

Some of these firms regained their permissions some months later, such as Mansion Park and County Capital Wealth Management, also trading as Pension Review Service.

Other such as Active Wealth went into liquidation and claims against it have already arrived at the Financial Services Compensation Scheme.

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