The FCA has issued a warning notice to an individual after their firms advised more than 700 defined benefit scheme members about the merits of transferring to a defined contribution pension.
As part of enhanced transfer value pension transfer exercises, 500 of the DB members decided to transfer to a DC scheme, with a total of £12.7m moved.
However, the regulator says many of these were at “serious risk of receiving unsuitable advice.”
The FCA did not name the individual it had warned, but says they had compliance oversight controlled functions at two authorised firms.
The FCA says in its warning notice: “The FCA considers that, between 1 February 2006 and 30 April 2009, the individual breached statement of principle 6 of the FCA’s statement of principles for approved persons by failing to use due skill, care and diligence in carrying out the compliance oversight function.”
Specifically, the regulatory said the individual failed to make sure the firms’ ETV advice process met its regulatory requirements.
According to the FCA, the individual failed to “identify obvious flaws in the ETV advice process which he should have identified either from his own review of the process, or from the limited file reviews that he undertook.”
The individual also “failed to give any or sufficient consideration to the compliance of the ETV advice process and of the advice given in his interactions with the pension advisers.”
The regulator has also raised conflict of interest concerns. It said the individual did not identify or manage potential conflicts over commission from the provider DB members were transferred to, and payments to a pension adviser based on how much ETV advice business they wrote.
The FCA concludes: “As a result of the individual’s failings, DB scheme members were at serious risk of receiving unsuitable advice.
“The FCA considers it likely that a significant proportion of the approximately 500 members who transferred from a DB scheme to a DC scheme would have decided not to transfer had they received suitable advice.”