Adviser fined £1.3m after pension transfer failures

Terron

 Telegraph article - ‘Seriously incompetent’ adviser fined £1.3m after pension transfer failures

Adviser Geoffrey Armin pocketed millions after failing to warn savers about pension transfer risks

Thrugelmir

Caveat Emptor

[Deleted User]

“ Advisors were paid £3,500 per British Steel worker they transferred off the company’s pension account, with a further £6,000 for every year each worker stayed with the new investment.”

Who incentivized these advisors? 

Linton

Might be worth reading https://www.fca.org.uk/publication/decision-notices/geoffrey-edward-armin-decision-notice-2021.pdf

One thing I picked up with a quick skim through.

"Mr Armin made recommendations to customers on the flawed assumption that a pension transfer to meet the customers’ stated objectives was in their best interest, and to recommend the product the customer wanted. As a result, Mr Armin gave undue weight to customers’ stated desire to transfer their pension and to meet various identified objectives, even where the identified objectives were not realistic and the pension transfer would be to their detriment."

which makes it very clear that the FCA considers that a DB pensioner's desire to move is far from sufficient to justify a positive transfer recommendation.

Bravepants

I would not be surprised if that's now the end of DB transfers.

Surely no advisor will touch them with a barge pole from now on?

Linton

Deleted_User said:

“ Advisors were paid £3,500 per British Steel worker they transferred off the company’s pension account, with a further £6,000 for every year each worker stayed with the new investment.”

Who incentivized these advisors? 

It seems Contingent Pricing was involved- now banned.

"RPPS operated a contingent charging model, whereby customers were only liable to pay fees to RPPS if they proceeded with Mr Armin’s Personal Recommendation to transfer out of their Defined Benefit Pension Scheme. Those fees for Pension 27 Transfers provided by Mr Armin and RPPS were based on a percentage of the CETV of the pension the customer wished to transfer. For the majority of customers, the fees payable to RPPS were deducted from their pension upon completion of the Pension Transfer."

Malthusian

“ Advisors were paid £3,500 per British Steel worker they transferred off the company’s pension account, with a further £6,000 for every year each worker stayed with the new investment.”

Who incentivized these advisors?

Presumably the clients. There isn't any suggestion that Armin was taking illegal commissions (it would have been a major part of the FCA's case otherwise) which suggests it must have been advice fees paid by the clients.

I am not sure where that paragraph has come from. It contradicts the Decision Notice which says that RPPS charged fees as a percentage of the transfer value. There is no mention of either the 3,500 or 6,000 figure in the FCA's Decision Notice.

Linton

Bravepants said:

I would not be surprised if that's now the end of DB transfers.

Surely no advisor will touch them with a barge pole from now on?

I guess advisors are OK if they keep strictly to FCA guidelines.  However perhaps the liability insurers may take a diffeent view.

Thrugelmir

Bravepants said:

I would not be surprised if that's now the end of DB transfers.

Surely no advisor will touch them with a barge pole from now on?

Where there's a market someone will step in to meet demand. Providing due process is followed nothing inherently wrong in transfers. People have different circumstances. 

Malthusian

Bravepants said:

I would not be surprised if that's now the end of DB transfers.

There is nothing in the Decision Notice to discourage reputable advisers who are doing their job properly.

Widespread misselling of DB transfers may indirectly cause reputable advisers to leave the market due to spiralling insurance costs, but most of the advisers who were going to leave the market for that reason already have.

marlot

Linton said:

..."Mr Armin made recommendations to customers on the flawed assumption that a pension transfer to meet the customers’ stated objectives was in their best interest, and to recommend the product the customer wanted. ....

Sounds like the advisor that many new posters on here would like to sign up!