Honister Capital has set aside £3m to cover the costs of its past business pension-switching review.
The firm’s 2010 accounts, published last week, state that the move is in response to the FSA’s thematic review of pension switching.
The FSA launched its review into the quality of pension switching advice in 2008. It visited 30 firms and assessed 500 files and found that unsuitable advice was given in 16 per cent of cases.
The regulator said 25 per cent of the firms in its sample provided unsuitable advice in 33 per cent or more of cases.
In 2009, the FSA undertook a follow-up programme of desk-based reviews and visits involving 22 firms considered to pose “a higher risk of poor advice”. It found that unsuitable advice was given in 34 per cent of the files reviewed.
Eleven firms were forced to conduct past business reviews and a further 11 firms were told they must review those files assessed as unsuitable or unclear and pay redress as appropriate.
Honister’s accounts state: “The regulator’s review has sector-wide implications and we have created a provision of £3m to cover the cost of reviewing advice and for any potential redress payments to clients.”
Last June, Positive Solutions brought in accountants KPMG to undertake a review of pension-switching busi- ness but insisted that the review was not instigated by the FSA or prompted by the emergence of unsuitable cases.
Honister Capital, which inc-ludes Honister Partners, Burns Anderson, Sage Financial and Willis Owen, made a profit of £4.3m in the 15 months to September 2010 since inception after the Money Portal went into administration.
The firm also announced that chief operating officer Richard Pearson has replaced Mark Lund as chief executive.