Berkeley Jacobs Financial Services has been fined £175,000 by the FSA for poor advice and misleading advertising of its pension unlocking service.
The Rochester-based firm must also set aside £1m to compensate up to 5,000 consumers who were encouraged to use their cash for short-term benefits such as holidays and buying luxury goods.
Berkeley Jacobs parent IFG Group has replaced managing director Paul Wheal with Paul Gardner-Bougaard, a group director of IFG. The other Berkeley Jacobs directors on the board at the time of the misleading campaign have also left the firm.
The FSA said the campaign, which aired extensively on Sky television, gave no explanation that releasing cash early meant sacrificing future pension income for short-term gain.
The firm was also criticised for failing to ask customers what income they thought they would need in retirement and failing to find out the value of their life policies and pension arrangements.
The FSA has made the firm review all financial promotions and appoint external consultants to review all sales and compliance procedures. It must also retrain the firm's five RIs and install new recording equipment to monitor advice given.
FSA director of investment firms David Kenmir says: “We will not tolerate firms showing such a blatant disregard for consumers' interests. No consideration was given to the substantial drop in the consumer's pension income or their inability to make up for that loss as they were so close to retirement.”
Gardner-Bougaard says: “As soon as we became fully aware of the problems at Berkeley Jacobs, we took immediate action to resolve the issues identified.
“We removed the management team responsible and reviewed all of Berkeley Jacobs' sales and compliance procedures and implemented changes where necessary.”
