IFA firm Read Independent Financial Advisers Limited has been fined £150,000 by the Financial Services Authority for what it calls "serious defects in its sales process" and other handling aspects pension unlocking cases.
This is the third such case of fines issued to companies handling early pensions unlocking in recent months, as earlier this year the FSA fined Berkeley Jacobs FS £175,000 and Sesame was hit a £250,000 fine for similar breaches.
Buckinghamshire-based Read labels itself, according to its website, as “specialists in the early release of pensions”, however the FSA argues the firm was fined for “inadequate familiarity with regulatory requirements and failure to include adequate risk warnings in its financial promotions”.
In particular, the FSA says around 1,100 clients were advised between September 2000 and January 2003 to remove their pension arrangements from existing or occupational schemes to new pension plans which then allow the benefits to be unlocked and let clients take sums ahead of retirement.
One of the strongest charges made against Read is even though these are highly specialised products, it only advised these clients to use pensions unlocking rather than offer early encashment as one of several options, particularly when these are seen as products only suitable for a limited number of people.
Moreover, the firm did not do enough to ensure clients have appropriate information about such products, and in some cases is said to have “made inappropriate statements in its promotions about the benefits of such products” in 2002 as the firm also failed to warn clients about the risks of early pensions unlocking.
The FSA says the company also failed to clearly and fairly inform clients about its charges as well as correctly gain information about the clients’ available assets, disposable income and income requirements - through its fact find questionnaire – to ensure the recommendations made were then suitable of customers.
Andrew Procter, FSA director of enforcement says Read – which is part of AWD, formerly known as Thomson’s – will also now review its past business and compensate any clients who were found to have been recommended such products when they were unsuitable for their circumstances.IFAonline
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