FSA fines IFA firm £24,500 for pension switching
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The FSA has fined London-based Robin Bradford Life and Pension Consultants £24,500 for exposing customers to unacceptable levels of risk of receiving poor pension switching advice.
The firm is also reviewing the pension switching advice conducted during the period in question to see whether any redress is required.
During its investigation, the FSA found that between April 6, 2006 and April 21, 2008, Robin Bradford Ltd exposed customers to the risk of receiving poor advice by failing to obtain and record relevant information and failing to include relevant information in suitability letters to help customers make an informed decision on whether to switch.
It also failed to adequately monitor the quality of its pension switching advice.
The FSA reviewed 10 of the firm’s pension switching files, selected randomly, and found eight did not contain a fact find document, two files did not have an assessment of the customer’s attitude to risk and two did not contain a suitability letter.
Of those same files, the FSA also found three did not contain an explanation of the advantages and disadvantages of switching pension. Two files were initially missing but both were found and of those files, one was considered as not being relevant to the investigation as no pension switch had taken place.
The FSA found Robin Bradford Ltd put customers at risk when it issued a direct offer financial promotion on switching pensions that contained a recommendation and therefore constituted advice.
In this way, the firm’s failure to communicate in a way that was clear, fair and not misleading put customers at risk of receiving unsuitable advice, as advisers had not assessed the suitability of the recommendation for each customer.
Head of retail enforcement Tom Spender says: “Robin Bradford Ltd exposed its customers to an unacceptable level of risk when they sought advice about pension switching.
“Encouragingly, the firm has acknowledged its failings and put in place new measures to reduce the risk of poor advice. Furthermore it is reviewing the pension switching advice conducted during the relevant period to see whether any redress is required.
“This is another example of the FSA’s commitment to taking action against firms who fall below our standards for pension switching. Firms need to get their houses in order as failure to do so will result in swift and severe action by the FSA.”
This is the third enforcement action following the FSA’s review of pension switching advice.
The firm qualified for a 30 per cent reduction in their fine for co-operating with the FSA. Were it not for this discount, the FSA would have imposed a financial penalty of £35,000.
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Readers' comments (11)
Julian Stevens | 16 Apr 2010 11:04 am
My initial impulse was to post the usual complaint of "All according to standards not published by the FSA at the time the advice now found to be defective took place". But for any firm to have allowed business to be transacted without FactFinds, an assessment of the client's attitude to risk and not even a letter of recommendation is about as far from present day accepted standards as it's possible to imagine. So such enforcement action does seem to be fully justified.
I look forward to reading reports on similarly rigorous investigations and enforcement actions in respect of sales undertaken by banks and DSF's.
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Pissed off IFA | 16 Apr 2010 11:13 am
The FSA's thuggery knows no bounds.
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John Delve | 16 Apr 2010 11:21 am
It is companies like this that cause problems for all of us. The missing information is basic and there is no excuse.
I am surprise that they are allowed to continue offering financial advice as I suspect that other customer files will be lacking as well.
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Anonymous | 16 Apr 2010 11:30 am
....I am sure there will be more cases like this one.
Just a thought, were does all the cash from fines end up, the FSA seem to be making millions at the moment? More help with 'Intermediary' Levys would be fair to those that work very hard to do things properly.
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Raymond Woodruff | 16 Apr 2010 11:31 am
I am pleased that I am part of a Network that checks 100% of all investment and pension business. Without each case being signed off you will not get paid. The temptation must (I assume this company was directly authorised) to let things slip or maybe put off the admin to another day and of course it never gets done. But no Factfinds. They deserve what they got I'm afraid. This type of thing is exactly where we were before regulation and it will pull us all down!
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Andy | 16 Apr 2010 1:07 pm
There is NO excuse for not completing Fact Finds or establishing a customers ATR.
It's an open and shut case, I'm surprised the penalty was not more severe.
The Banks have all had their pension switches reviewed, as yet, none have been fined.
It looks like those determined to have a go at the banks should re-think their argument, there are good and bad advisers aveywhere (in Banks and at small IFA firms), the banks sack their bad advisers as soon as they're identified and this is often viewed as banks getting rid of poor performers and wongly interpreted as reflecting a "high target" pressure sales environment.
If an adviser at a bank had completed pension transfers in a similar manner they would probably be sacked for breaching the sales process....
All advisers know how to do the job properly. Those who chose not to should be forced out of the industry
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Gillian Cardy | 16 Apr 2010 3:43 pm
To Anonymous 11:30am
Fines received by the FSA are treated as income and are used to offset the fees levied to firms in the same sector as the "offender". Though £24,500 received would represent a deduction of about £5 per firm - don't spend it all at once :-)
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Pissed off IFA | 16 Apr 2010 5:16 pm
There are obviously some of you who should be employed with the FSA. Let's hear the firm's side of the story.
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Jim Payne | 19 Apr 2010 11:35 am
Julian Stevens and 'Andy'.
We now understand, from Crash Gordon himself, that the banks were 'too lightly supervised at their own request'. A request that he now, for purely political purposes, 'ever so 'umbly' admits he agreed to but for which he is now so sorry (We are now asked to choose whether to accept that this arrogant, I know better than the lot of you, man was either too weak willed to deny such a request or that he had little idea of the consequences, much like the pensions debacle. Take your pick either is hardly a ringing endorsement for a man who would be elected PM.)
I therefore doubt the banks will be fined Julian, as they have more or less obtained a load of blanket exemptions, thus making them far less regulated than the rest of the industry.
As far as Andy's comments are concerned I can only speak from personal experience. I worked in Life, Pensions and Investments sales for a 'major' high street bank. Latterly, for some 8 years, I was both a salesman in my own right and also a Manager and Field Sales Trainer. I was appalled at the HO training of new recruits as, when they can to me 'in the field', they told me that they had 'done the calculations' during training and the figures clearly showed that many public sector employees would be better off transferring into private schemes!!! I had a fight on my hands not only to re-educate them, but also to try and get the Head Office trainers to mend their ways and counter the fact that they were allowing trainees to come off 'induction training' with a license to peddle these ideas. The trainers effectively told me that if trainees came up with such calculations themselves then that was OK! so be it!!
Anyway Andy IFA's are being fined for not having systems in place or for not adhering to systems. Banks and DSF's have on many occasions failed on one or both counts yet we rarely hear of them being fined for this and I doubt that they have been as heavily vetted as your comments suggest. Perhaps you have better information than the rest of us.
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Richard Price | 20 Apr 2010 10:00 am
Not got an issue with the fine, but is it necessary for the FSA to keep blowing their own trumpet with these cases? The final notice on the website includes details of the firm's turnover and profits.
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