Small pension scheme put nearly half its assets into Lifemark
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A small pension scheme was advised to invest nearly half its assets into Keydata life settlement vehicle Lifemark.
The Financial Mail on Sunday reports that a pension scheme for employees of Yorkshire-based Micro Metalsmiths was advised to invest £2m of its £5.25m assets in Lifemark by a local IFA, Lampott.
The firm employees 120 staff and 50 retired workers are currently drawing from the scheme. It has already had to pump £160,000 into the scheme to keep it afloat, according to the Financial Mail report.
The report says Micro Metalsmiths is suing the IFA in the hope its PI insurer pays out on the losses incurred.
In a statement given to the Financial Mail, Lampott says: “As the trustees of the Micro Metalsmiths Retirement Benefit Scheme have lodged a formal complaint, until our investigations are concluded and reported to the trustees it is not appropriate for us to make particular comment in this case.”
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Readers' comments (27)
Alan B | 25 Oct 2010 9:18 am
It is precisely this kind of poor quality advice and commission chasing that the RDR is trying to deal with and if any advisers still think that experience should excuse you from getting our so-called "profession" into shape, you should be ashamed.
Unfortunately this is not an isolated incident and we see this type of report over and over again. The only way to make this type of incident an exception is to raise standards within the "profession".
I find it quite staggering that there is so much resistance to passing a few exams and adopting an open and honest policy with clients in respect of commission. In every other profession I can think of, a pre-requisite to becoming practicing professional is the attainment of the industry's flagship qualification and the basis of how a client will be charged agreed at the outset.
If you can't or don't want to raise the standard of our profession then please get out now and let those of us who do get on with it.
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Neil F Liversidge | 25 Oct 2010 9:46 am
Alan B - congratulations on taking such careful aim before you machine gunned yourself in both feet. Below is an extract from lampott's website. As you can see, these re fee-based highly qualified advisers. Have a nice day Mr B!
Here's what it says: Richard Lamborn joined the industry in 1980 and trained with Scottish Amicable. In 1985 he joined a provincial broker and acquired Lampott Limited in 1993. Richard is an appropriately qualified (by advanced examination) pensions specialist and arising from his personal ethos is valuing and prioritising the needs of clients.
Andrew Clarke joined the industry in 2000 following the completion of an honours degree, training as an IFA with Towry Law based in Leeds. He gained invaluable experience working in the City as an IFA with Sedgwick before returning to Yorkshire to put down roots. His determination for continued career progression within an ethical firm of pensions specialists encouraged him to join Lampott Limited in 2006. Andrew is a conscientious adviser dedicated to providing a bespoke and professional service to meet client aspirations.
Our services are normally fee based however we are happy to be flexible in this regard and, with client agreement, will take provider commission as an alternative to fees.
End of extract. Ex-Towry Law eh?
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Chris F | 25 Oct 2010 9:51 am
to Alan B:
We do not know how qualified the adviser was in this instance, the process followed or what the client's input was.
Either way I do not see how a qualification could have made a difference one way or another here. It's hardly rocket science to consider diversity is it?
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Phil Castle | 25 Oct 2010 9:58 am
I don't think exams would have made any difference with this one Alan as the exams are not in COMMON SENSE.
I don't have level 4 yet, but even I can see the flaw in this one, so I don't think you can use this for an RDR argument for higher qualifications.
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Evan owen | 25 Oct 2010 9:59 am
From: Evan [mailto:evan@cerrighedd.com]
Sent: 24 October 2010 11:12 AM
To: 'Hector Sants'; 'hobanm@parliament.uk'
Cc: 'treascom@parliament.uk'
Subject: "Richard is an appropriately qualified (by advanced examination) pensions specialist"
From the Lampott site:
"Richard is an appropriately qualified (by advanced examination) pensions specialist"
The FSA is insisting that "advanced qualifications" be taken by all advisers in order to "raise standards" and "provide better outcomes for consumers".
Mark Hoban likened current adviser qualifications to "the same level as a diploma in shift management offered by McDonald's".
Well Mr Hoban, and Lord Turner, I only have FPC but despite my lowly qualifications I would never have advised this firm to invest even £5 in the Lifemark backed black hole.
Common sense and experience is more valuable than "advanced qualifications", the sooner you realise this the better it will be for the nation, if you look at all the brains at HM Treasury, the BofE and the FSA you can see that all those bright sparks failed spot the banking crises, Equitable et al. A trail of "Collective Intellectual Failure" of gigantic proportions and they get bigger each time!!
Evan Owen
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Alan Lakey | 25 Oct 2010 10:08 am
If you care to look at the website of the firm in question you will note that they confirm one of the advisers as having an Honours Degree and the other as 'highly qualified' in the pensions arena.
Their website also promotes the ethcial aspects of their business.
What does this tell us then?
You can be highly qualified and still get it wrong. All the letters and credentials in the world mean nothing if you do the wrong thing by your customer.
The RDR would not have stopped this and, as always, it comes down to adviser morality and not examinations and other strictures.
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Evan Owen | 25 Oct 2010 10:15 am
Alan B
You assume too much, this IFA is a fee earner according to his website.
This is the kind of comment which perpetuates the urban myth that there is some ideal 'model' of distribution. There isn't, and the RDR will not work in the way you, or the regulators, might imagine.
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Tony Marsden | 25 Oct 2010 10:20 am
Have I missed something here? Where in the article is there any reference whatsoever as to how the IFA was paid? Why the assumption he received a commission as opposed to a fee or retainer for advice to the trustees? And why the assumption that an IFA remunerated by fee would not recommend this product?
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Bob Donaldson | 25 Oct 2010 11:38 am
Having been at the end of an investment like lifemark the big problem as I see it is not always the advice that is given, but the way some fund managers and companies dress up investments to pass on to the IFA community.
Yes we can all be good with hindsight and throwing stones really does the industry no good, I think that products need to be cleared with the FSA and risk marked at outset. Thereafter if the risk changes it is the IFAs responsbility. However, some sort of risk marking at the outset might avoid some of the Banana skins that our community keeps slipping on!
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Mike Fenwick | 25 Oct 2010 11:43 am
@ Tony Marsden - Have you miseed something?
True or not I don't know, but clicking through the above link to the Financial Mail article, you find this:
" ... Lampott earned £60,000 commission-from selling the Keydata investment to Micro's pension scheme."
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