Financial Services Compensation Scheme  

BSPS adviser enters default with 35 claims

BSPS adviser enters default with 35 claims

Pembrokeshire Mortgage Centre, one of the advice firms which gave up its transfer permissions in the wake of the British Steel pension scandal, has failed with 35 claims against it.

The firm, which traded as County Financial Consultants, was placed in default last week (January 14), paving the way for the Financial Services Compensation Scheme (FSCS) to pay out on any eligible claims against it.

The lifeboat scheme said it has so far received 35 claims against the firm.

It is now yet known how much the FSCS is expecting to pay out on these claims.

A declaration of default happens when the FSCS is satisfied the firm cannot meet any eligible claims made against it.

Meanwhile, the Financial Ombudsman Service told FTAdviser it would be transferring around 20 complaints to the FSCS, once it receives the consumers’ permission to do so.

Pembrokeshire Mortgage Centre went into liquidation in September 2020. In 2017 the firm had voluntarily pulled out of the pension transfer market and in April 2018 it left the pension market entirely.

But it continued to advise on investments, except pension transfers and pension opt outs.

Data released by the Financial Conduct Authority this week showed he number of advice firms operating in the pension transfer market has fallen by nearly half since 2015, as insurance costs and regulatory changes took their toll.

Out of the 1,310 firms still active in the market, 254 firms (19 per cent) had provided 3,427 clients with a personal recommendation to transfer from the BSPS in 2017-18.

The FCA said it would follow up with every firm involved with BSPS advice.

Separate data from the regulator showed it had thwarted a dozen adviser attempts at phoenixing in the first 10 months of 2020.

Mamunul Wahid, solicitor at Clarke Willmott, said he has come across several BSPS advisers trying to phoenix.

Mr Wahid said: “The FCA claims to take a robust stance in relation to directors who use liquidation to deliberately avoid paying compensation following claims arising from poor advice. 

“However, in reality, we have already seen several directors of firms involved in BSPS phoenix into other firms and, despite reporting it to the FCA, business continues. 

“It cannot continue to be the case that advisers are allowed to leave claims behind for the rest of the industry to pay through their increasing FSCS levies and simply carry on business in a different firm.”

He added: “There have to be consequences for advisers who profit enormously from, in my view, mass mis-selling and seek to leave claims with the FSCS. 

“The FCA needs to start taking firm action and make sure of it.”

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