The FCA has fined advice firm Inspirational Financial Management (IFM) £897,840.
The firm, which is in administration, poorly advised people to transfer out of defined benefit (DB) pension schemes, including the British Steel Pension Scheme (BSPS), according to the regulator.
Arthur Cobill, an adviser at IFM, and William Hofstetter, one of its directors, have been banned from advising customers on pension transfers and pension opt outs.
Hofstetter has also been banned from holding any senior management function at a regulated firm.
Cobill and Hofstetter agreed to pay £120,000 and £40,000 respectively to the Financial Services Compensation Scheme (FSCS) to contribute to compensation for IFM’s customers.
The regulator said the firm operated a contingent charging model, which meant it only collected fees if customers transferred out of their DB pension schemes following the firm’s advice. This approach benefitted IFM, Hofstetter and Cobill but risked the long-term financial health and interests of their customers.
Customers transferring out of the BSPS were already in a ‘vulnerable position’ due to the uncertainty surrounding the scheme, the FCA noted.
Out of 307 IFM customers advised to transfer out of their DB pension scheme, 261 completed the process. Cobill advised 245 of those, including 198 members of the BSPS. Hofstetter was responsible for the compliance oversight.
Therese Chambers, joint executive director of enforcement and market oversight, said: ”Pensions are the safety net people spend their lives building. For many customers, their DB pension was their most valuable asset, and it was their only retirement provision other than their state pension.
“As experienced advisers, Mr Cobill and Mr Hofstetter, and IFM should have known better than to unravel this. It is only right that Mr Cobill and Mr Hofstetter contribute towards compensating those affected.”
