On April 16 the FSA finded Robin Bradford (Life and Pension Consultants) Ltd (Robin Bradford), a London based IFA firm, £24,500 for exposing customers to unacceptable levels of risk of receiving poor pension switching advice.
The case in part related to switches from a group pension scheme where members were offered the opportunity to switch into a group Sipp.
Hargreaves Lansdown head of pensions policy Tom McPhail says the case is significant because the regulator found against the adviser even though it had given written disclaimers to clients, confirming that transactions were done on an execution-only basis.
The FSA determination notice says: ’Although the letter included a disclaimer paragraph “this letter and the attached discussion document is not intended to provide a member with personal advice but to describe the options available in a generic way” there are elements of a recommendation and advice being given in the letter and the discussion document’
The FSA said the fact that the letter and discussion document were given to each member in his capacity as an investor and by the firm’s advisers in their capacity as fully qualified IFAs, and that information was given in relation to particular investments, meant an element of advice was present. Documents also gave advice on the merits of different options.
McPhail says: “Even though the adviser told clients in writing that it was not advising them to switch, this was found not to be a non-advised transaction. The business made a £3,000 profit out of this work – yet the fine was over £24,000. For a large IFA to get caught doing this, the fine could be huge. The message is that even though you think that you have made the transaction execution-only, you may not have.”
Tom Spender, head of retail enforcement at the FSA, 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.”
