In the latest action against a firm for providing unsuitable advice to former members of the British Steel Pension Scheme (BSPS), the FCA has censured Lighthouse Advisory Services Limited (Lighthouse). The firm has since been taken over and, by the end of April, had paid out some £23.17m ($29m) in redress to customers.

From April 1, 2015 to April 30, 2019, Lighthouse advised 1,567 customers, of whom 262 were BSPS members. More than half (53%) of the advice was found to be inappropriate – a rate higher than the industry average on unsuitable BSPS advice levels (46%).

“Many consumers were wrongly advised by Lighthouse to transfer out of their valuable guaranteed pensions,” said Therese Chambers, Executive Director of Enforcement and Market Oversight at the FCA.

Failings were also found in 28% of the advice given to non-BSPS customers.

Paying redress

Lighthouse was acquired by Quilter Financial Planning Limited (Quilter) in late June 2009, and the new owner has taken responsibility for the unsuitable advice and carried out redress.

By the end of April this year, Quilter had paid out around £23.17m ($29m) in redress to customers, and has since then paid out £0.44m ($0.55m) more.

Two Lighthouse advisers, who were partially based on site at the British Steel works in Scunthorpe, did not “challenge BSPS members’ reasons for transferring or properly consider alternatives to meet their retirement objectives”. They also, in some cases, failed to provide evidence on why a transfer would be good for customers.

“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,” Chambers said.

Replaced management team

Quilter’s high-level cooperation in this investigation has been praised by the FCA, along with its proactive redress exercise. Bearing this in mind, the regulatior considers a censure to be the “appropriate outcome”.

Quilter has also replaced Lighthouse’s senior management team and the internal processes used to define benefit transfer advice.

“Quilter deserves full credit for taking responsibility for unsuitable advice given before they bought Lighthouse and for the proactive way in which they’ve worked with the FCA to put it right,” Chambers said.

Earlier FCA actions

The BSPS case is a long-running one, and the FCA has previously taken action in:

• February 2023 – Naming 15 more firms in the row over the redress scheme.
• February 2023 – Forcing two firms, Abbey Lane Financial Associates Limited and Estate Capital Financial Management Limited, to stop making deceptive offers to British Steel pensioners.
• January 2023 – Issuing a warning to firms over a ‘deliberate attempt to exclude’ pensioners from the compensation scheme.
• December 2022 – Fining Pembrokeshire Mortgage Centre Ltd £2.4m ($3.01m) for providing unsuitable advice to consumers to transfer out of the BSPS and DB pension schemes.

In January 2023, the FCA faced a legal challenge from a group of advisers, which was believed to be an attempt to stall the redress scheme. The legal challenge was however dropped later in April.