Paul Steel, the director of Estate Matters Financial Ltd (EMF), has been banned from working in financial services after giving unsuitable advice to customers to transfer out of defined benefit pension schemes.

He has also been ordered to pay £850,000 ($1.08m) to the Financial Services Compensation Scheme (FSCS).

According to the FCA, more than 480 clients were advised by EMF to transfer out of their defined benefit pension schemes between 2015 and 2018. And the majority – 86% – of the advice given was proven to have failed to meet the required standards. Some of the clients included the British Steel Pension Scheme, where the regulator has worked hard in the recent months to justify and bring redress to mistreated customers, and recently banned other advisers too.

Sold client book

Besides the unsuitable transfer advice, Steel also “showed a lack of honesty and integrity” by selling his client book to himself – for less that its value, and customers who lost out could not pursue EMF for redress. 

“Mr Steel failed to provide suitable pension transfer advice. But he also failed to act with honesty and integrity when he improperly sold the firm’s assets for less than their value – to himself – so that he could enjoy the profits of the business without the burden of the risks that he had created,” said Therese Chambers, Joint Executive Director of Enforcement and Market Oversight.

For selling his client book, the FCA sought and obtained a freezing injunction, and brought proceedings to seek redress for the customer losses. A fine of £3,694,400 ($4,700,825) was imposed on Steel. However, the FCA has agreed not to enforce this provided that Steel pays £850,000 to the FSCS so funds can go back to customers instead of being spent on High Court proceedings.

“We are determined that those who fail in their duties to their customers take responsibility for paying towards redress and do not expect the FSCS, and the vast majority of firms who do the right thing, to pick up the tab for their failings,” Chambers added.

As of June 27, 2023, FSCS has paid out £1,752,125.71 ($2,229,498) in relation to claims valued at £4,539,474.73 ($5,776,269) to clients who were given unsuitable pension transfer advice by EMF.

“He also failed to act with honesty and integrity when he improperly sold the firm’s assets for less than their value – to himself – so that he could enjoy the profits of the business without the burden of the risks that he had created.”

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight

Other disciplinary actions in relation to the British Steel Pension Scheme include:

• June 2023 – Forcing three more firms to reverse misleading pension offers.
• May 2023 – Censuring an adviser over incorrect advice to British Steel pensioners.
• 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.