Financial Services Compensation Scheme  

FSCS reverses adviser's default status declared in error

FSCS reverses adviser's default status declared in error

The Financial Services Compensation Scheme (FSCS) has reversed a declaration of default against advice firm Better Retirement Group after it was made in error.

The lifeboat scheme declared the firm in default last week (June 16) paving the way for the FSCS to pay out on any eligible claims against it.

However this default was based on a winding up order which has been rescinded, therefore the FSCS has reversed its declaration.

The FSCS stated: "Following discussion with the firm, it has been established that the FSCS default was declared on the basis of a now-rescinded winding-up order against the firm. The FSCS declaration of default has therefore been reversed."

A declaration of default happens when the FSCS is satisfied the firm cannot meet eligible claims made against it.

Stuart Bayliss, executive chairman at Better Retirement, said he was pleased that the FSCS had admitted its mistake and corrected the firm's status.

Bayliss said: "We are unclear as to why it has taken from February 11, 2021, when the Court rescinded the winding-up order as an error, until June 16 for the FSCS who mistakenly announced our default. This has been an error since February 11.

"During the six days the FSCS website was displaying incorrect information, we have had three companies cancel agencies as well as calls from around a dozen clients (you never know how many don’t call) and other IFAs, along with the stress and concern of our team.

"The FSCS needs to be aware of the power of their announcements as checking with the relevant company would have avoided this problem. Unfortunately we didn’t hear from anyone prior to the apology and confirmation of correction from anyone at the FSCS.”

Last October Better Retirement Group suspended its defined benefit transfer permissions after failing to renew its professional indemnity insurance.

According to a notice on the Financial Conduct Authority’s register at the time, the firm had to stop advising on DB transfers from October 14.

It had to also cease “completing pipeline business in relation to the conversion or transfer of pension benefits” and received an asset retention requirement, meaning it could not sell business assets, for example its clients book, without approval from the regulator.

At the time, Stuart Bayliss, executive chairman at Better Retirement, told FTAdviser the firm voluntarily gave up its permissions after high costs meant it could not get PI cover.

Bayliss explained how the firm had originally gone down the route of self-insuring until the FCA made it clear that this was not an option.

He said the firm looked to get PI cover but that it was “too expensive”.

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