The Financial Services Compensation Scheme has begun to process claims against a West Midlands-based advice firm after concluding certain claims are eligible for compensation.
BBT Financial Services was placed in default today (September 2), paving the way for the FSCS to pay out on any eligible claims against it.
The lifeboat scheme said it has so far received 13 claims, after concluding in mid-July it was able to accept claims in principle.
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.
BBT has not been authorised with the Financial Conduct Authority since July 2013 and as such is no longer able to provide regulated products or services.
The FSCS first started accepting claims against BBT in June 2019, while it was carrying out an investigation into the activities of the firm.
The firm has had claims at the Fos in the past. Back in 2018 it was ordered to pay redress by the Financial Ombudsman Service on pension transfer advice given in 1995.
The Fos found the firm had given unsuitable advice when it recommended its client to transfer his pension from Clerical Medical to Scottish Equitable because of the future opportunity to take phased withdrawal or drawdown with the provider.
The ombudsman found the client was not intending to retire or take benefits for about three years after the transfer.
Therefore, if he did want the option of drawdown or phased withdrawal that could have been considered further down the line when he took the benefits and, if necessary, a transfer could have happened then, the Fos ruled.
What do you think about the issues raised by this story? Email us on email@example.com to let us know.