The Financial Conduct Authority (FCA) has banned Simon Hughes of S&M Hughes Limited from advising customers on pension transfers, pension opt outs and from holding any senior management function in a regulated firm.
Hughes has been fined £158,600 by the Financial Services Compensation Scheme (FSCS) to contribute to redress his customers, most of which were members of the British Steel Pension Scheme (BSPS).
With the FSCS paying out over £8.4 million ($10.1m, €9.7m) in compensation to Hughes’ customers for the unsuitable advice they received.
Hughes was solely responsible for the pension transfer advice provided by the firm (which is in liquidation) in his role as pension transfer specialist and financial adviser.
Between April 2015 and May 2019, 232 out of a total of 287 customers were advised to transfer out of their defined benefit pension scheme, including 188 BSPS customers, despite FCA guidance stating that, as a starting point, it should be assumed that such transfers are not in customers’ best interests.
Hughes did not have a reasonable understanding of the alternative options available to BSPS customers and gave undue weight to the customers’ desires to transfer their pension.
He also failed to obtain the necessary information relating to the customers’ financial situation and failed to properly assess whether customers would be reliant on the income from their DB pension and whether they could bear the risks associated with a pension transfer.
He also recommended transfers to customers without adequately considering if the transfer met the customers’ stated objectives.
The FCA found that Hughes failed to act with due skill, care and diligence.
Therese Chambers, joint director of enforcement and market oversight at the FCA, said: “The decision to transfer out of a DB pension scheme is a potentially life changing one and it’s vital that customers get suitable advice. Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided.
“BSPS customers were particularly vulnerable, and Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.”
