Thousands of retirement savers have picked up compensation after advice firms failed to give them the right pension guidance.
The Financial Services Compensation Scheme (FSCS) has paid out £48.9 million compensation to the clients of three firms criticised for offering poor service.
The firms and five advisers who worked for them were accused of acting without integrity and misleading industry regulator the Financial Conduct Authority (FCA).
Two of the companies are in liquidation – Financial Page Ltd and Henderson Carter Associates Ltd. Both were issued with a censure.
The third company, Bank House Investment Management Ltd, was ordered to pay a penalty of £311,639.
The five advisers who acted as directors of the at least one of the companies were barred from giving financial advice and ordered to pay penalties totalling £1.05 million.
They are Andrew Page and Thomas Ward, of Financial Page Ltd; Aiden Henderson, director of Henderson Carter Associates Ltd, and Robert Ward and Tristan Freer, directors of Bank Hall Investment Management Ltd.
The FCA claims the directors “closed their minds to the obvious risks” of recommending unsuitable products to clients and says they were “reckless” as approved persons controlling each company.
The regulator found clients were recommended pension transfers to investments in “high risk, illiquid assets which were unlikely to be suitable for them”.
“The directors also acted dishonestly by providing false and/or misleading information to the FCA, in some cases on more than one occasion,” said the FCA.
Cold-calling to find customers
The FCA also accuses the firm of cold-calling to generate client leads and outsourced work to unregulated advice firms. The FCA explained that the outsourced firms are not accused of any wrongdoing and were not the subject of any penalty.
The FSCS has settled 4,776 claims against the three companies, with 95 still in progress.
The advisers and Bank Hall are challenging the decisions at a tribunal.
The FCA regulates financial services and financial advisers in the UK, while the FSCS is a government-approved rescue service that pays compensation to clients of failed financial firms.