2 advisers face ban over 'flawed' pension transfers

The FCA has provisionally banned and fined two financial advisers over failings involving £126m of allegedly "flawed advice" pension transfers. The two, Richard Fenech and Heather Dunne, have conditionally been banned from working in financial services and fined £270,646 and £399,817 respectively. Mr Fenech was the sole director of Financial Solutions Midhurst Limited (FSML) (FRN: 459575) and was responsible for overseeing Ms Dunne, who was FSML's appointed representative (trading as HDIFA). FSML was based in Fareham, Hants. So far, the Financial Services Compensation Scheme (FSCS) has paid over £770,490 in compensation to FSML clients, with potential total client losses estimated at nearly £2m. Some £126m worth of pension transfers were arranged by the two advisers. Ms Dunne advised approximately 92% of her clients to transfer out of their defined benefit (DB) pension schemes, resulting in over £126m of funds being transferred, “often against her clients' best interests,” the FCA said. Both have appealed the decision notice to the Upper Tribunal so their punishments will remain provisional until the Upper Tribunal, an appeals court, rules on their cases. The FCA says it found that the pair operated a “flawed advice model” that put customers’ guaranteed pension benefits at significant risk. It also said that Ms Dunne failed to act with due skill, care and diligence when providing pension transfer advice. According to the watchdog, Ms Dunne failed to take into account the destination of the customers’ investments when advising whether defined benefit pension transfers were suitable. This was due to the use of a flawed two-adviser advice model in which Ms Dunne provided the pension transfer advice while another firm provided investment advice on the proposed onward investment after the pension transfer had concluded. As a result of the process, Ms Dunne did not know where her clients’ money was going when advising on the transfer, leaving customers exposed to the risk of unsuitable pension transfers, the FCA said. Mr Fenech was responsible for the oversight of HDIFA’s business. However, despite being made aware by FSML’s external compliance consultant of the risk arising from HDIFA’s use of the two-adviser advice model, he did not stop HDIFA from operating it. He also failed to ensure that Ms Dunne’s pension transfer advice complied with regulatory standards, the regulator said. Mr Fenech and Ms Dunne also, "failed to act with integrity" because of their involvement in the dishonest provision of a backdated appointed representative agreement to the FCA, the watchdog said. Therese Chambers, FCA joint executive director of enforcement and market oversight, said: “People must be able to trust the advice they receive about their pension. The actions of these individuals are wholly unacceptable, as they exposed customers to significant financial risk. “Ms Dunne provided advice which was fundamentally flawed and Mr Fenech failed in his responsibilities to oversee her work. In doing so, both demonstrated a complete disregard for customers’ needs through retirement, and the suitability of pension transfers, so it is right we ban them from the industry.” Ms Dunne’s fine was reduced to £399,817 from £494,917, having shown this amount would cause her serious financial hardship. FSML and HDIFA are both in liquidation.

2 advisers face ban over 'flawed' pension transfers

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