Pembrokeshire Mortgage Centre Ltd fined £2.4 million by regulator

Pembrokeshire Mortgage Centre Limited (PMC), trading as County Financial Consultants, gave unsuitable advice to consumers to transfer out of the British Steel Pension Scheme (BSPS) and other defined benefit (DB) pension schemes, the Financial Conduct Authority (FCA) said.

PMC advised 420 consumers, nearly two-thirds of whom were BSPS members, on whether to transfer out of their DB pension scheme.

Overall, 93% were advised to transfer. PMC earned more than £2 million in transfer and ongoing advice fees.

The FCA’s view is that most people should keep the guaranteed income provided by a DB pension, which is a valuable investment with advantages that cannot be replicated by other investments.

Strong reasons are required for it to be suitable for a person to exit a DB pension scheme in favour of another investment, the regulator said.

DB schemes guarantee people a certain level of income in retirement, based on their salary.

The average transfer value per customer was around £293,000, or £314,000 for BSPS members, the FCA said.

As of November 30 2022, the Financial Services Compensation Scheme (FSCS) has upheld 213 pension transfer claims against PMC and paid out more than £13.3 million in compensation.

The FCA issued a fine of £2,354,331. PMC is currently in liquidation. The FCA said it will give preference to creditors, some of whom may be consumers, ahead of its financial penalty, to maximise funds available for redress.

Many of the people advised were in a vulnerable position due to the uncertainty surrounding the future of BSPS and the short timescale they had to make a decision.

However, they did not receive the quality of advice they needed to make an informed decision, the regulator said.

They needed clear, objective and expert advice but PMC gave unsuitable advice in 60% of cases, according to the FCA.

Mark Steward, executive director of enforcement and market oversight at the FCA said: “Pembrokeshire Mortgage Centre advised hundreds of consumers to give up valuable defined benefit pensions without any adequate justification or rationale, using generic, templated advice not tailored to the specific circumstances of their customers while earning fees in doing so.

“The quality of advice seen here was woeful. The failings were particularly egregious in the context of the British Steel Pension Scheme, where customers were in an unusually vulnerable position. The FCA’s investigation into the involvement of others in these matters remains ongoing.

“Any consumers who were advised to transfer should contact the Financial Services Compensation Scheme to see if they are owed redress.”

The failings included the provision of generic suitability reports that were not tailored to the circumstances of individual consumers and contained contradictory, misleading and confusing statements, the FCA said.

PMC also failed to have adequate resources to deal with the increase in cases caused by BSPS, further impacting the quality of advice provided, it added.

Many consumers were advised to transfer out even though they were relying on the guaranteed income to fund their retirement and could not afford to bear the risk of transferring out, according to the regulator. This included those who needed the money to provide for dependents needing long-term care.

The address in the FCA’s final notice to PMC was given as Havannah Street, Cardiff.

The FCA said it is continuing to progress around 30 ongoing enforcement investigations into firms and individuals relating wholly or partly to BSPS advice, all of which are at a very advanced stage and some are in litigation.