Pension scandal has come back to bite Quilter

FINANCIAL advice group Quilter says it had no idea when it bought the Lighthouse group last year that it was letting itself in for a flood of misselling claims. It should have done.

There had been dark whispers about Lighthouse advisers greedily urging British Steel workers to transfer out of their generous company defined benefit (DB) pensions for years.

All Quilter needed to do was pick up the phone to folk in Port Talbot and Scunthorpe.

There, they’d have come across men like Andy Willerton, a tough steelworker of 30 years’ standing, now left hundreds of thousands out of pocket after being advised to quit the BS scheme for an expensive private pension plan. The fees he now pays alone cost him more than he was hoping to draw on when he retired.

Having effectively dismissed the scandal as regrettable, but financially immaterial when quizzed by the Standard in

March, Quilter went onto set aside first £12 million, now £29 million for compensation. All as a result of buying a company for which it paid just £46.2 million.

The FCA just reviewed a sample of the British Steel pension transfers to find only a fifth — a fifth! — had been suitable. The rest had been missold, presumably to reap big fees for the advisers.

Given that Lighthouse did more than 300 of these transfers, the fear has to be that more money will have to be set aside in future.

Two lessons: one, don’t scrimp on due diligence. Two: never transfer out of a DB pension. Unless you’re about to die, it’s nearly always financially better for the adviser than you.