David Watters first worked at Belfast-based FGS McClure Watters (FGS) and then Lanyon Astor Buller Ltd (LAB) after FGS ceased to be an authorised firm in 2008 and all of its business was transferred to LAB.
The Financial Conduct Authority found that he failed to take reasonable steps to ensure that the processes for giving advice on enhanced transfer value (ETV) pension transfer exercises were adequate and met regulatory standards.
ETV exercises incentivise customers to transfer their pensions.
During these exercises, the FCA said it is vital that customers considering giving up their guaranteed benefits are given suitable advice on the real benefits and consequences so that they can properly conclude whether a transfer is in their best interests.
Watters has been fined £75,000.
The failings came to light after the FCA conducted a thematic review into ETVs and requested a sample of 17 customer files from LAB.
Approximately 500 customers that received advice from FGS or LAB transferred their pensions from a defined benefit (DB) scheme to a defined contribution (DC) scheme, with a combined value of approximately £12.7m.
The regulator found that, in all 17 cases, customers lost benefits or guarantees without good reason or sufficient justification. They were also all deemed unsuitable because those customers incurred additional costs without good reason.
In five cases, it was unclear whether customers were exposed to a level of risk they were not willing or able to take.
LAB has agreed to contact affected customers and where loss has been caused, it will pay appropriate redress.
Catalogue of failings
The FCA said that Watters did not give sufficient consideration to whether the advice process was compliant; he did not take reasonable steps to gain a sufficient understanding of the relevant regulatory requirements; and did not obtain an appropriate third-party review of the processes to ensure compliance.
He also failed to take reasonable steps to ensure that advisers were properly monitored to reduce the risk of unsuitable ETV pension transfer advice being given to customers.
Mark Steward, executive director of enforcement and market oversight, said: “It was Mr Watters’ responsibility to take reasonable steps to put in place a compliant advice process. His failure to do this placed customers at risk of needlessly losing valuable benefits for their retirement.”