The FSA has slammed tied firms for failing to investigate customers’ existing pension arrangements, under its review into pension switching advice.
In an update on its probe, the FSA says four firms have been ordered to carry out costly section 166 reviews on past business as part of the pension switching advice review. Money Marketing understands one major retail bank is among the firms.
The FSA says it found evidence of tied firms preventing their advisers from investigating existing pension arrangements where the arrangements were outside the firm’s product range.
It says: “Irrespective of the adoption of a tied advice model, there is a duty on the firm to act in the best interests of the customer and to take steps to ensure a recommendation is suitable.”
Syndaxi Chartered Financial Planners managing director Robert Reid says: “This behaviour is not defensible. They are just trying to shoehorn customers into their product.”
Since its 2008 report on pension switching advice, the FSA has investigated 22 firms, of which two were retail banks, and found unsuitable advice was still being given in over a third of cases.
Director of conduct risk Dan Waters says: “We remain concerned that some firms continue to give poor advice. Ignorance is no defence and we will not hesitate to take tough action against any firms that fall below our standards.”