The Financial Conduct Authority (FCA) has issued a suitability warning to an "individual" after their advice resulted in approximately 500 defined benefit (DB) transfers.
The regulator said the individual was "approved to perform the CF10 (compliance oversight) controlled function" at two authorised firms. Between them, the two firms provided advice to more than 700 members of DB schemes, resulting in around 500 transfers into defined contribution (DC) schemes totalling £12.7m.
The FCA said: "Between 1 February 2006 and 30 April 2009, the individual breached Statement of Principle 6 of the FCA's Statement of Principles for Approved Persons by failing to use due skill, care and diligence in carrying out the compliance oversight function."
The regulator said the failings and oversights could result "in a serious risk of unsuitable customer outcomes" and considered it likely the 500 members "would have decided not to transfer had they received suitable advice".
According to the FCA's warning, the individual had failed specifically to inform themselves of the nature and risks for enhanced transfer value (ETV) business and failed to "take reasonable steps to ensure the ETV advice process complied with and was capable of providing advice that complied with, applicable regulatory requirements".
The individual had not sought independent expert opinion and advice to verify ETV compliance, the FCA said, nor to ensure the external compliance consultant appointed was suitably qualified. The regulator also said they had overlooked obvious flaws in the ETV advice process, which they should have indentified by themselves or with an external compliance consultant.
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