Financial Conduct Authority  

FCA fines adviser embroiled in £112m of pension transfers

FCA fines adviser embroiled in £112m of pension transfers

The Financial Conduct Authority has fined the director of an advice firm which oversaw the transfer of more than £112m of pension funds into high-risk and unregulated investments. 

The regulator imposed a fine of £23,400 on Lloyd Pope, the former director of collapsed advice firm TailorMade Independent Limited, who has been banned from holding a position of senior management at a regulated business since 2015. 

In a final notice the FCA partly blamed Mr Pope's regulatory failures as cause for 1,661 clients transferring a total of £112,420,985 from pension funds into unsuitable self-invested personal pensions. 

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The transfers took place between 2010 and 2013 and saw client funds invested in unregulated investments including green oil biofuel oil, farmland and overseas property - 923 clients invested in developments operated by Harlequin.

In those three years TMI generated £3,081,740 in revenue from its Sipp business and Mr Pope was paid, either directly or via a company controlled by him, £446,912 from the advice business. 

The FCA said Mr Pope failed to take "reasonable steps" to ensure TMI assessed the suitability of the underlying product contained within the Sipp for the customer.

According to the regulator, Mr Pope admitted TMI had not performed a risk assessment of the underlying products and therefore would not have been able to advise whether the products were suitable for clients.

TMI entered liquidation in October 2013 and defaulted with the Financial Services Compensation Scheme in July 2014, with the lifeboat body currently assessing claims against the adviser but having already upheld 1,245. 

The FCA also identified conflicts of interest at the firm which it said Mr Pope had failed to manage or disclose, with the "vast majority" of clients referred by an unregulated introducer which was paid commission. 

The watchdog said: "For TMI’s customers, a Sipp was a way of investing their pension into esoteric, unregulated investments such as overseas property which were typically not permitted by their existing pension schemes.

"These investments often offered the potential for higher returns than customers’ existing pension schemes, but carried a far higher risk, including the risk that unregulated products are not covered by the FSCS."

Mr Pope was originally fined £93,800 and banned for his failings in March 2015, but the penalty was later withdrawn by the FCA as a result of issues relating to the limitation period allowed in the case against a fellow director at TMI.

As a result the regulator has issued a revised penalty to Mr Pope to the tune of £23,400, which includes a 30 per cent reduction as a result of his willingness to agree an early settlement in the case. 

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