FSA fines pension-switching services £143,500 over bad advice

Customers were told to switch pensions regardless of situation or requirements, says regulator

UK pension-switching firms Perspective Financial Management (PFM) and Cricket Hill Financial Planning have been fined £49,000 and £70,000 respectively for providing unsuitable advice to customers.

Director of Cricket Hill Jeremy Sheard will also pay £24,500 in a fine. Mark Kelsey, who was responsible for compliance at the firm, was issued with a public censure.

The UK Financial Services Authority (FSA) says advice and sales processes at Cricket Hill had “significant problems”, alleging the firm routinely advised customers to switch their pensions to a pension fund risk management service. This occurred without sales staff first researching alternatives, and the firm was unable to demonstrate the suitability of advice provided.

The regulator also notes the firm failed to identify conflicts of interest in the process. Sheard also owned shares in the risk management service that customers were directed to, something that was never disclosed. However, the FSA says no payments ever came out of the service to either Cricket Hill or any of its employees or directors.

Similar failings occured at PFM, says the FSA. Allegedly staff at the firm would fail to research customers’ situations thoroughly before issuing advice, with the FSA specifically mentioning “details of customers’ existing pension plan, needs and objectives”.

The regulator found the firm provided unsuitable advice in five of the nine cases it reviewed. This included customers being advised to switch to almost identical pension scheme, incurring costs greater than the potential benefit, and a lack of information provided on choices. The regulator claims that, as a result, “customers could not make informed decisions about whether to switch pensions”.