IFA firms may have to pay back £150m

15 April 2010 | By Helen Pow

The FSA expects IFA firms will have to pay more than £150m in redress for poor pension switching advice by the time all the reviews have been concluded.

The regulator has published findings of a follow-up to the original pension switching review carried out in 2008. It says although it has seen improvement, it is concerned that a number of firms are still giving high levels of unsuitable advice.

Since the original review, a further 22 firms that posed the highest risk of offering poor advice has been assessed. Since 2008, six firms have been referred to the FSA’s enforcement division as a result of work on pension switching. RSM Tenon Financial Services and Financial Ltd have already been hit with fines.

The FSA says its follow-up work has highlighted additional concerns, with some advisers found to be offering portfolio advice services,where the additional costs were not justified. It also says some tied advisers are not investigating a customer’s existing pension arrangements.

Director of conduct risk Dan Waters says: “The actions we have taken to raise standards have driven significant change in the market and will see large sums of money returned to customers who received poor advice. In fact, more than 10 per cent of all pension switching advice since April 2006 will be looked at again.

“Ignorance is no defence and we will continue to focus on the high risk firms through intensive supervision. We will not hesitate to take tough action against any firms that fall below our standards.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “It is positive that customers are going to get their money back. I hope the analysis that determines whether the wrong thing has been done is robust. Some looks a bit tick-boxy but perhaps that is a reflection of the scale of the problem.”

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