The Financial Conduct Authority has censured Lighthouse Advisory Services for the unsuitable advice given to those looking to transfer out of defined benefit pension schemes.
These “serious failings” occurred between 2015 and 2019, when Lighthouse advised 1,567 members of DB schemes, including 256 members of the British Steel Pension Scheme.
The FCA said that in many cases Lighthouse’s advisers did not challenge the reasons members had for wanting to transfer their pension, nor did they properly consider alternatives to meet their retirement objectives. In some cases they failed to provide evidence as to why a transfer would be in members’ best interests.
As a result of these failures the FCA said that 53 per cent of the advice provided to BSPS members was unsuitable — higher than the industry average, where 46 per cent of the advice given to BSPS members was inadequate. A similar level of failings in the advice process was found with other DB scheme members — with 28 per cent of the advice deemed unsuitable.
Lighthouse was acquired by Quilter Financial Planning in 2019. The FCA says that Quilter has since taken responsible for these failings, and have proactively carried out a redress exercise which has seen it pay out £23.17m to customers. This puts customers back in the financial position they would have been it were it not for the unsuitable advice provided by Lighthouse advisers.
A further £0.44m has also been offered to affected customers. The FCA said this redress is far in excess of the fees Lighthouse received for the original advice.
FCA executive director of enforcement and market oversight Therese Chambers says: “‘Many consumers were wrongly advised by Lighthouse to transfer out of their valuable guaranteed pensions. Given the vulnerable position of consumers transferring out the British Steel Pension Scheme, the firm should have taken real care in providing advice – it failed to do so.
“Quilter deserves full credit for taking responsibility for unsuitable advice given before they bought Lighthouse and for the proactive way in which they’ve worked with the FCA to put it right.”
The FCA said that Quilter provided very high levels of cooperation to the FCA during the investigation, and has proactively sought to offer redress to customers. As a result the FCA says it consider censure to be the appropriate outcome, rather than disciplinary action or further fines.
Since Quilter acquired Lighthouse, Quilter has replaced Lighthouse’s senior management team and its internal processes in relation to defined benefit transfer advice.