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Third firm fined over switch risk

The FSA has fined London-based Robin Bradford Life and Pension Consultants £24,500 for exposing customers to unacceptable levels of risk.

It is the third enforcement action resulting from the regulator’s pension switching probe. The firm is also reviewing the pension switching advice conducted to see if any redress is required.

The FSA found that between April 6, 2006 and April 21, 2008, Robin Bradford Ltd exposed customers to the risk of receiving poor advice by failing to obtain and record relevant information and failing to include relevant information in suitability letters to help customers make an informed decision on whether to switch.

It also failed to adequately monitor the quality of its pension switching advice.

The FSA reviewed 10 of the firm’s pension switching files, selected randomly, and found eight did not contain a fact-find document, two did not have an assessment of the customer’s attitude to risk and two did not contain a suitability letter. The regulator also found three did not contain an explanation of the advantages and disadvantages of switching pension.

The regulator found Robin Bradford Ltd put customers at risk when it issued a direct-offer financial promotion on switching pensions that contained a recommendation and therefore constituted advice.

The firm’s failure to communicate in a way that was clear, fair and not misleading put customers at risk of receiving unsuitable advice, as advisers had not assessed the suitability of the recommendation for each customer.

Head of retail enforcement Tom Spender says: “Robin Bradford Ltd exposed its customers to an unacceptable level of risk when they sought advice about pension switching. Encouragingly, the firm has acknowledged its failings and put in place new measures to reduce the risk of poor advice. Furthermore, it is reviewing the pension switching advice conducted during the relevant period to see whether any redress is required.

“This is another example of the FSA’s commitment to taking action against firms who fall below our standards for pension switching. Firms need to get their houses in order as failure to do so will result in swift and severe action by the FSA.”

In March, the FSA fined Charles Palmer, a director of IFA network Financial Limited, £49,000 for management failings in monitoring pension switching advice. In February, RSM Tenon Financial Services Limited was fined £700,000 for pension switching failings and for failings in its advice and sales processes for Lehman-backed structured products.

So far, the FSA has ordered IFA firms to pay out more than £150m in redress to clients as part of its follow-up work on pension switching advice.

In an update last week, the FSA criticised tied firms for failing to investigate customers’ existing pension arrangements and revealed that four firms have been ordered to carry out 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.

Robin Bradford Life and Pension Consultants Ltd qualified for a 30 per cent reduction in its fine for co-operating with the FSA. Without the discount, the FSA would have imposed a financial penalty of £35,000.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. I understand that a regulator should do it’s job and punish wrongdoing but why not regulate the products properly rather than punishing a firm that sells them.

    Did the FSA need to pay some large salaries or hotel bills recently?

  2. What an unbelievable post from anonymous.

    When is this industry going to take responsibility for its actions. The general public sometimes read these posts and must be absolutely dismayed that advisers continue to defend non compliant behaviour from their peers, and use this forum to take a swipe at the FSA.

    This adviser was fined because 8 out of 10 cases did not have any KYC information, 2 did not contain a suitability report and 3 did not contain sufficient explanation as to the advantages and disadvantages.

    How will regulating products stop advisers like this clearly flouting the regulations on know your client and suitability?

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