The Financial Conduct Authority has censured Lighthouse Advisory Services Ltd for unsuitable advice given by the firm’s advisers to those looking to transfer out of defined benefit pension schemes, including the British Steel Pension Scheme.

 

A censure is a statement by the regulator making the misconduct of a firm public without necessarily issuing a penalty. The FCA said that Lighthouse’s new owners, Quilter, have provided very high levels of cooperation during the investigation, as well as paying more than £23m in redress. Quilter has also replaced Lighthouse’s senior management team and its internal processes in relation to DB transfer advice. 

 

“Together with its proactive redress exercise, FCA therefore considers a censure to be the appropriate outcome,” the watchdog said. 

 

Between 1 April 2015 and 30 April 2019, Lighthouse advised 1,567 customers, 262 of them members of the BSPS, which has become synonymous with factory gating, where advisers target defined benefit members of a company that is undergoing significant restructuring. 

 

Lighthouse had two advisers partially based on site at the British Steel works in Scunthorpe. The FCA stressed that many of those advised were in a vulnerable position due to uncertainty around the scheme. 

 

Therese Chambers, the regulator’s executive director of enforcement and market oversight, said: “Many consumers were wrongly advised by Lighthouse to transfer out of their valuable guaranteed pensions. Given the vulnerable position of consumers transferring out [of] the British Steel Pension Scheme, the firm should have taken real care in providing advice – it failed to do so.” 

 

Lighthouse’s advisers did not challenge BSPS members’ reasons for transferring or properly consider alternatives to meet their retirement objectives, according to the regulator, which said that in some cases, they failed to show why a transfer would be in members’ best interests. The average transfer value for BSPS clients was £482,603; for other customers, it was £325,295. 

 

The poor practice of these advisers meant more than half (53%) of the advice given to BSPS members from April 2015 to April 2019 was unsuitable, which is higher than the already very high overall levels of unsuitable BSPS advice (46%). 

 

Similar failings in the advice process were found for non-BSPS customers, where 28% of the advice was unsuitable. 

 

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