The Financial Conduct Authority (FCA) has recently issued substantial penalties against four individuals associated with St Martin’s Partners LLP (SMP), a financial services firm now in liquidation. The FCA’s action underscores its commitment to protecting consumers from inadequate financial advice, particularly regarding pension transfers.
Between October 2015 and July 2016, SMP’s pension transfer advice model exposed 547 customers to considerable risk. It was found that the firm’s advice model led clients to transfer from their guaranteed defined benefit pensions to high-risk investments, including ventures in Cape Verde promoted by The Resort Group Plc.
Read more about defined benefit pension transfers.
It is reported that SMP failed to evaluate the suitability of these investments against the benefits of existing pensions. Critically, the FCA found that the lack of consideration given by SMP to pertinent analysis reflected a disregard for customer welfare.
SMP’s pension transfer model was markedly flawed, relying on introducer firms such as First Review Pension Services Ltd (FRPS), a subsidiary of The Resort Group. Partners of SMP, Frank Oxberry and Alec Cuthbert, neglected to ensure proper due diligence was performed on at least 16 introducer firms: FRPS, among others.
Collectively, the total fine for the four SMP advisers amounts to £590,544: a significant financial penalty which reflects the severity of their misconduct. Bans for the four from working within the financial services sector have also been imposed without exception.
Following SMP’s liquidation, the Financial Services Compensation Scheme (FSCS) has overseen £13.4 million in compensation payments to affected clients.
The individuals facing penalties – with the exception of Mr Cuthbert – have referred their cases to the Upper Tribunal which will review the FCA’s decisions. The Tribunal’s findings will be critical in determining whether the FCA’s penalties are upheld or modified.
