Collapsed wealth firm targeted DB pensions, FCA says

The collapsed wealth manager SVS Securities plc encouraged IFAs with defined benefit clients to promote transfers to high risk investments, the watchdog says.

Earlier in the week SVS went into administration as the FCA launched a probe into the firm for undisclosed reasons.

But the first supervisory note from the FCA on SVS sheds light on why it was banned from conducting regulated activities and disposing clients’ assets.

The note details how SVS breached conduct of business rules and acted in a manner that went against clients’ best interests.

SVS worked closely with third parties, in particular bond issuers/product providers and professional advisers, to help generate demand for the investment products offered through SVS, according to the regulator.

It did this without regard for the investment needs of customers who were subject to high fees and charges paid to SVS and to other transaction parties.

In some cases, these fees, commissions and charges amounted to over 20 per cent of the customer’s total investment.

The FCA highlights email correspondence records that SVS encouraged IFAs to promote its model portfolios as an investment solution specifically for clients who were proposing a DB pension transfer or Sipp switch.

Yet SVS increased the proportion of illiquid and high-risk bonds in its model portfolios that is likely not consistent with the needs and risk appetite of pension investors.

Approximately 90 per cent of SVS’ discretionary fund management business customers are invested in SVS’s model portfolios as a result of having received pension switching or pension transfer advice.

The FCA’s investigation raises particular concern over the lack of due diligence, high concentration and liquidity risk in relation to bonds issued by Corporate Finance Bonds Limited.

It says documents obtained from SVS show its model portfolios have had a consistently high exposure to these bonds in circumstances where SVS lacks adequate information about the underlying loan recipients and their financial standing.

The FCA expressed its concerns about this to SVS in January 2018 which then in fact increased the exposure of its model portfolios to CFBL’s bonds.

The note says from 31 March 2018 to 13 May 2019, CFBL exposure increased in its income (53 per cent to 78 per cent), mixed (46 per cent to 61 per cent) and growth (45 per cent to 51 per cent) portfolios.

It adds: “These also include other illiquid investments with high or unknown risks. SVS increased this exposure in circumstances where it lacked information from CFBL properly to assess the risk of these investments.”


DB transfer values and activity increase during July

Transfer values rose during July 2019 while the number of defined benefit transfers also increased, according to consultants XPS Pensions Group. It runs XPS Transfer Watch made up of two indexes that monitor market developments which affect transfer values and how much transfer business it has administered internally. The first index – XPS Transfer Value […]


PI provider imposes case limits for DB transfers

AmTrust has become one of the latest professional indemnity insurers to impose case limits for defined benefit transfer advice, Money Marketing understands. Additional premiums are required to increase the cap put on DB transfers, advisers tell Money Marketing. All firms must now have some limit or other with regard to DB transfer business to ensure […]


FCA sets out contingent charging ban for DB transfers

The FCA has proposed a ban on contingent charging for defined benefit transfers in its latest attempt to stop unsuitable advice. The decision to put forward a ban for consultation this morning marks a change of direction for the regulation, which had decided not to tighten the rules on contingent charging – under which advisers […]


AJ Bell calls on new chancellor to simplify Isas

The chief executive of investment platform AJ Bell has called on new chancellor Sajid Javid to simplify Isa rules to close the savings gap. Andy Bell says Isas have become “unnecessarily complicated” and the complexity is a barrier to people saving more. In the open letter, Bell writes: “As the newly appointed chancellor I believe […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm