Pension provider LV has apologised to a group of customers, after informing them that their adviser had changed and they would be paying charges to a new firm.
In July, Swansea-based Portfolio Financial Consultancy bought the client book of S&M Hughes Limited, which trades as Crescent Financial.
Among the company's clients are people who transferred out of the British Steel Pension Scheme to defined contribution plans with LV.
FTAdviser has seen one of the letters sent by LV to one of Crescent's previous clients, which stated that the firm has novated its business, and that Portfolio is the new adviser on record.
The letter also stated that “the ongoing adviser charge of 0.5 per cent will now be paid to them [Portfolio]”.
Financial Conduct Authority rules require retail investment providers and platforms to obtain and validate instructions from a retail client in relation to an adviser charge they offer to facilitate.
A spokesperson at LV said: “When S&M Hughes ceased trading, Portfolio Financial Consultancy took over the client book.
“LV requires written permission from customers before we will transfer advisers. However, following an administrative error some clients received letters informing them that Portfolio would be their new adviser.
“Once this was discovered, LV immediately put a stop to it and no fees have been paid.”
The provider is now in the process of contacting the customers affected to apologise for any confusion this has caused, it added.
Paul Stocks, financial services director at Dobson & Hodge, said: "Whilst it can, at times, feel like regulation moves at significant pace I would expect providers to be fully aware of regulatory rules concerning adviser charges.
"Therefore I’m surprised LV appears to have overlooked this and started applying costs against clients plans which haven’t been agreed to."
FTAdviser reported in June that LV had stopped payments of ongoing advice fees to Crescent Financial, after the firm was told to cease all regulated activities by the FCA.
In the meantime, the firm has started liquidation proceedings.
It was the second British Steel adviser after Active Wealth to enter liquidation and claims against the latter have already arrived at the Financial Services Compensation Scheme.
Problems started after 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 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 the Pension Review Service, while others failed.
maria.espadinha@ft.com
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