IFA firm is fined £21k for pension switch advice risk
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The FSA has fined Gateshead IFA firm N-Hanced £21,000 for exposing customers to the risk of receiving poor advice about switching their pension.
It found the firm had not recorded sufficient information about customers to demonstrate its advisers had identified clients’ needs and reflected them in any recommendations made.
N-Hanced also failed to adequately monitor the quality of its pension switching advice and record relevant management information on such business.
The FSA reviewed 10 of the firm’s pension-switching files and found three did not contain a fact-find. The ones that did have a fact-find all recorded insufficient personal information.
Three files did not contain an adequate explanation or comparison of the charges between the existing scheme and the new scheme. In one file, the fees in the new product were higher than the existing one but there was no explanation to justify the switch.
Six files had insufficient information to establish how attitude to risk had been reached, in three files, suitability letters were not adequately tailored to the individual client and two files had a suitability letter that had been reviewed by the firm’s external compliance consultants and found to have “significant omissions”.
FSA director of the enforcement and financial crime division Margaret Cole says: “Pension switching is a complex area and firms engaged in this type of business should be aware that N-Hanced is the fourth enforcement action following the FSA’s review of this sector.”
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