The company was involved in a scandal
The Financial Conduct Authority (FCA) has fined Pembrokeshire Mortgage Centre Limited (PMC) £2,354,331 for providing unsuitable advice to consumers.
In 2017, PMC advised most of the 420 consumers, nearly two-thirds of whom were BSPS members, to transfer out of the British Steel Pension Scheme (BSPS) and other defined benefit (DB) pension schemes. PMC, then trading as County Financial Consultants and now in liquidation, earned over £2 million in transfer and ongoing advice fees.
Contrary to PMC’s advice, the FCA’s view is that most people should have kept the guaranteed income provided by a DB pension. The FCA noted that 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, the regulator determined that they did not receive the quality of advice they needed to make an informed decision.
The FCA pointed out that 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. This included those who needed the money to provide for dependents needing long-term care.
“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,” Mark Steward, executive director of enforcement and market oversight at the FCA, said.
“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.”
Steward urged any consumers who were advised to transfer to contact the Financial Services Compensation Scheme to see if they are owed redress.
The regulator added that PMC also failed to have adequate resources to deal with the increase in cases caused by BSPS, further impacting the quality of advice provided.
As PMC is currently in liquidation, the conduct regulator said it will give preference to creditors – some of whom may be consumers – ahead of its financial penalty, to maximise funds available for redress.
The FCA said it continues to progress ongoing enforcement investigations into firms and individuals relating wholly or partly to the BSPS advice, all of which are at a very advanced stage, and some are in litigation.