Swansea adviser banned for 'negligent' BSPS advice

Swansea Financial adviser Simon Hughes has been banned by the FCA and made to pay £158,600 redress for “negligent” pension advice which has led to £8m compensation being paid to his BSPS member clients. The regulator said Mr Hughes of S&M Hughes Limited (in liquidation) “demonstrated a high degree of incompetence.” He has been banned from advising customers on pension transfers and pension opt outs, and from holding any senior management function in a regulated firm. He will pay £158,600 to the Financial Services Compensation Scheme (FSCS) to contribute to redress due to his customers, most of which were members of the British Steel Pension Scheme (BSPS). The FSCS has so far paid out over £8.4m in compensation to Mr Hughes’ customers for the unsuitable advice they received. Mr Hughes was solely responsible for the pension transfer advice provided by the firm 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. That was despite FCA guidance stating that, as a starting point, it should be assumed that such transfers were not in customers’ best interests. Mr Hughes did not have a reasonable understanding of the alternative options available to BSPS customers and gave undue weight to the customers’ stated desire 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 Mr Hughes failed to act with due skill, care and diligence. Therese Chambers, joint director of enforcement and market oversight, 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. Mr Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided. “BSPS customers were particularly vulnerable, and Mr Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.” By 28 July, the FSCS had paid out £8,415,317 in compensation to customers of S&M Hughes. Had it not been for the compensation limit of £85,000, the total compensation available to customers would have been £10,482,437. Any customers who were advised to transfer by S&M Hughes Limited should contact the FSCS to see if they are owed compensation. Around 8,000 people transferred out of the BSPS, and FCA evidence suggests almost half (46%) did so after receiving unsuitable advice. In November 2022 It announced a redress scheme for consumers who had transferred out of the BSPS. Before the scheme, firms had already paid £35m in redress to customers following FCA action. The FSCS has also paid out over £69m. The FCA expects consumers to receive a further £49m through the redress scheme. It has taken enforcement action against a number of firms where it has discovered evidence of serious misconduct. Last week it banned Darren Reynolds and Andrew Deeney of Active Wealth Limited over £42.3m-worth of dishonest pension transfer advice. Mr Reynolds was fined £2,212,316 while Mr Deeney’s fine was £397,400. Earlier in September it banned Keith Dickinson and Andrew Allen of Mansion Park Limited and ordered them to pay £155,000 in compensation.

Swansea adviser banned for 'negligent' BSPS advice

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