Accountant fined over advice errors on pensions
A NORTHERN Ireland accountant has been fined £75,000 after two firms he worked for issued inadequate pension advice. The Financial Conduct Authority said David Watters failed to exercise due diligence in his role as compliance oversight officer at FGS McClure Watters and at Lanyon Astor Buller Ltd (LAB).
The FCA found Mr Watters failed to take reasonable steps to ensure the process for giving advice on enhanced transfer value (ETV) pension transfer exercises at both firms was adequate and met regulatory standards.
This led to a serious risk of unsuitable advice being given to customers about the merits of transferring their pension from a defined benefit (DB) to a defined contribution (DC) scheme.
The new DC regime allows members to tailor their benefits to suit their own requirements. Yet members of DB pension schemes need to transfer to DC arrangements to access these flexible pension benefit options.
Approximately 500 customers who received advice from the two companies transferred their pensions from a DB scheme to a DC scheme, with a combined value of approximately £12.7m.
In many cases, it may have been unnecessary for customers to leave DB schemes, thereby losing their guaranteed benefits.
The FCA said Mr Watters failed to give sufficient consideration to whether the advice process was compliant; did not take reasonable steps to gain a sufficient understanding of regulatory requirements; and did not obtain an appropriate third-party review to ensure compliance.
Mr Watters also failed to take reasonable steps to ensure that advisers were properly monitored to reduce the risk of unsuitable ETV pension transfer advice being given to customers.
Mark Steward from the FCA said: “It was Mr Watters’ responsibility to take reasonable steps to put in place a compliant advice process. His failure to do this placed customers at risk of needlessly losing benefits.”
LAB has agreed to contact affected customers and where loss was caused, it will pay redress.