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Read IFA fined 150,000 for pension unlocking

The FSA has fined Read Independent Financial Advisers Limited 150,000 for advising consumers to unlock their pensions.

The FSA says Read has been fined because of serious defects in its sales process, inadequate familiarity with regulatory requirements and failure to include adequate risk warnings in its financial promotions.

These breaches potentially affected 1,100 consumers between September 2000 and January 2003.

The FSA has been looking closely at the way in which a number of financial advisers have failed to act in the best interests of consumers when advising on pensions unlocking.

The fine is the third of its kind imposed on an IFA firm this year. In February 2004 Berkeley Jacobs Financial Services Limited was fined 175,000 and in October Sesame was fined 250,000 for similar regulatory breaches.

Director of enforcement Andrew Proctor says: “To ‘unlock’ money from a pension is a very serious decision for a consumer and it is absolutely crucial that firms make sure customers are clear on the risks involved. If consumers unlock their pensions early they will have less money to live on when they retire, making these products suitable only for a very limited number of people and circumstances.

“Read did not find out enough about its customers’ financial circumstances or needs to be sure that it was recommending a suitable product to vulnerable consumers, many of whom were nearing retirement age. It also failed to ensure that it explored other options with its customers, so that it could be sure that pensions unlocking was the best available choice.”

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