Last week, the FCA confirmed it has prohibited 5 directors from financial advice firms from working in financial services, after the Upper Tribunal found they had failed to act with integrity.
Instead of receiving the independent and impartial advice they were entitled to, over 2,000 customers placed their pensions in high-risk financial products in self-invested pensions (SIPPs), suffering losses of over £50 million. They have now been compensated by the Financial Services Compensation Scheme.
Not only does this ruling shine a light on firms’ relationships with unauthorised introducers, it has also had a significant impact on other financial services firms, which will now have to contribute to the costs of the FSCS.
Jamie Patton, at Johnson Law Group, said: “This ruling will have major implications within the financial services industry and sadly, I fear this won’t be the last time we’ll see instances where private individuals are taken advantage of by advisors who are focused on their own gains made from transfer of funds rather than giving appropriate advice.
“While historically the pensions industry was well-regulated, the Pensions Freedom Act brought in in 2015 opened the door to those who wanted to take advantage of a more flexible system.
“This more flexible approach works well for individuals who have large investment portfolios where only a small proportion of their fund is placed in a high risk- high reward scheme. Where it falls down is where people with limited pension savings and no investment experience are persuaded to invest everything in a high-risk venture – and then lose everything. If you are worried your pension investments have been affected by mis-selling, negligent advice or fraud, you may have the right to bring a claim and recover some or all of your losses. Simply submit a contact form or phone us directly and we’ll provide a no-obligation consultation.”