A FSA investigation found that Perspective Financial Management, whose Milton Keynes office is at Wolverton Mill, had given unsuitable advice in five out of nine cases reviewed.
PFM made unsuitable recommendations to customers to switch pensions when the new pension was almost identical to their existing scheme. As a result, customers incurred unnecessary costs.
The investigation also revealed that customers could not make informed decisions about whether to switch pensions as PFM provided inadequate information on the cost of services associated with the new pension such as discretionary fund management.
The firm had also failed to put in place any system or procedure to ensure it only recommended Unregulated Collective Investment Schemes to customers who met specific statutory exemptions such as those of high net worth or who were sophisticated investors.
Yorkshire-based financial planning company Cricket Hill was fined £70,000, its director Jeremy Sheard ordered to pay £24,5000 and colleague Mark Kelsey issued with a public censure.
Both firms cooperated with the FSA’s investigations. The FSA has also appointed a skilled person to carry out past business reviews of relevant pension-switching cases at both firms.
Margaret Cole, managing director of the FSA’s enforcement and financial crime division said: “Pension switching is a complex area, and any adviser recommending a change of provider must be able to demonstrate that this advice is suitable. Firms that fail to do this put customers at risk of being worse off due to exit penalties applied to their existing pension and higher charges on the new pension.
“The FSA considers the failings at PFM and Cricket Hill to be serious, and will not hesitate to take action where we find evidence of bad practice relating to pension advice.”
