The Financial Services Compensation Scheme has paid a total of £48.9m in compensation relating to three advice companies reprimanded by the regulator over pension transfer failings.
The Financial Conduct Authority has imposed a £311,639 penalty on advice firm Bank House Investment Management Limited and issued public censures on Financial Page Ltd and Henderson Carter Associates Limited.
Decision notices published earlier today (May 9) were issued against the companies for their part in pension transfer advice which led to more than 2,000 customers investing approximately £76m of their pensions in high risk investments.
According to the FCA the firms, which outsourced parts of the process to unregulated companies, had "little meaningful oversight and involvement" in the service provided to their customers.
The City watchdog also stated it had evidence suggesting cold calling was used in the outsourced advice process to generate customer introductions, finding all three companies had failed to take any steps to ensure cold calling was not used.
Financial Page Ltd and Henderson Carter Associates Limited are in liquidation, but had their financial circumstances allowed the regulator would have issued the companies with fines of £283,100 and £239,900 respectively.
Bank House Investment Management Limited is challenging its fine at tribunal.
The FSCS has confirmed it has to date paid £22.5m in compensation relating to Financial Page Limited, for 2781 claims upheld with 27 claims still in progress.
A total of £18.3m has been paid in relation to Henderson Carter Associates Limited for 1376 claims upheld, with 57 still in progress, and £8.1m was paid in relation to Bank House Investment Management Limited for 619 claims upheld with another 11 in progress.
Almost all of the claims against the three companies related to self-invested personal pensions and other pension claims.
Five individuals who ran the three advice firms have been fined by the regulator and issued with prohibitions, although all are challenging the decision notices at the Upper Tribunal and the penalties therefore have no effect pending the outcome of the cases.
The FCA alleges the directors "closed their minds to the obvious risks" of the unsuitable products recommended to customers, claiming they had acted "recklessly" as approved persons in controlled functions at each company.
The regulator found customers were recommended pension switches and pension transfers to products that invested in "high risk, illiquid assets which were unlikely to be suitable for them".
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