Financial Services Compensation Scheme  

FSCS receives 149 claims against IFA rebuked for DB advice

FSCS receives 149 claims against IFA rebuked for DB advice

The Financial Services Compensation Scheme has received 149 claims against an independent financial adviser which previously found itself in hot water over unsuitable defined benefit advice. 

Manchester-based Copia Wealth Management defaulted with the lifeboat body earlier this week (January 6) after being placed into liquidation in September last year. 

The claims against Copia relate to self-invested personal pensions, investment bonds, investment portfolios, private pension transfers and other pension advice, but the FSCS is yet to pay out any compensation. 

It is not the first time the firm's defined benefit transfer advice has found itself the target of scrutiny, with the Financial Ombudsman Service rebuking Copia last year. 

The ombudsman found Copia had incorrectly assessed a client as wanting to take high risk investments when deciding to go ahead with a defined benefit transfer, which would see him take £10,000 tax free cash and invest the remaining sum of £34,000.

When the advice firm entered liquidation last year the Financial Conduct Authority urged clients to "take care" if approached by claims management companies or anyone claiming to be a representative of Copia as they "may take a substantial fee".

The regulator also warned customers over scams, urging them not to respond to cold-calls.

Copia had been authorised by the FCA since 2013 but applied to cancel its status at the end of August last year, according to the watchdog’s register.

The firm also used to trade as Absolute Isa, Alpha Isa and Westway Isa up until April 2019.

Claims pressure on FSCS 

The FSCS paid out £282m in compensation to clients of 549 defaulted firms in the life distribution and investment intermediation class in the 2019/20 financial year. 

The UK's financial compensation scheme told FTAdviser last year about 75 per cent of the compensation costs stemmed from failed advice firms and DFMs, accounting for £212m of the bill.

Self-invested personal pensions and other pension advice claims remained the largest cost in the class, totalling £161m in successful claims.

During the year, the FSCS was forced to raise a supplementary levy following an increase in pension transfer and Sipp advice claims, as well as more complex and expensive advice claims overall.