The disciplinary actions arising from faulty advice given to former British Steel Pension Scheme (BSPS) members continue, with Inspirational Financial Management Ltd (IFM), now in administration, fined £897,840 ($1,146,082) for advising customers to transfer out of their defined benefit (DB) pension schemes. The FCA found that 83% of all IFM’s advice failed to comply with its minimum required standards, and that customers risked financial loss due to that advice.

The company was found to have provided unsuitable pension transfer advice between June 8, 2015 and December 22, 2017, and to have failed to properly consider the customers’ best interests on whether to transfer out of their secure DB pensions or not.

IFM was operating a contingent charging model, in which it only collected fees if customers followed its advice to transfer out of their DB pension schemes. The FCA said that this approach risked the customers’ long-term financial health and interests.

Banned and fined

Arthur Cobill, an adviser at IFM, and William Hofstetter, one of its directors, were also banned and fined £120,000 ($153,246) and £40,00 ($51,082) respectively for faulty advice to customers. Both were banned from advising customers on pension transfers and pension opt outs, and Hofstetter was also banned from holding any senior management function at any regulated firm.

Of 307 IFM customers that were advised to transfer out of their DB pension scheme, 261 choose to do so. Cobill advised 245 of them, and 198 were BSPS members. In total, the BSPS members that Cobill advised had pension benefits worth totalling over £90m ($115m).  

“Pensions are the safety net people spend their lives building. For many customers, their DB pension was their most valuable asset, and it was their only retirement provision other than their state pension,” said Therese Chambers, the FCA’s Joint Executive Director of Enforcement & Market Oversight. “As experienced advisers, Mr Cobill and Mr Hofstetter, and IFM should have known better than to unravel this.”

British Steel Pension Scheme

In 2023, the FCA took enforcement actions against 14 firms and individuals in relation to the British Steel Pension Scheme, with sanctions totalling £5.4m ($6.8m); financial penalties of £3.9m ($4.9); and payments to the Financial Services Compensation Scheme of £1.5m ($1.9). The actions included:

• November 2023 – Two advisers banned and fined £26,800 and £40,888.
• November 2023 – A First Supervisory Notice with restrictions on KBFS Financial Limited.
• November 2023 – Person banned and fined £200,000.
• October 2023 – Two advisers and banned and fined £2,212,316 and £397,400.
• October 2023 – Pension transfer specialist and financial adviser banned and fined £158,600.
• September 2023 – Two advisers were banned and fined £70,000 and £85,606.
• September 2023 – Two former directors of CFP Management Ltd were banned and fined £681,536 and £632,594.
• July 2023 – Adviser banned and ordered to pay £850,000 in redress to clients.
• June 2023 – Adviser banned, and ordered to make a £106,000 payment to the Financial Services Compensation Scheme.
• June 2023 – Three more firms forced to reverse misleading pension offers.
• May 2023 – Adviser censured  over incorrect advice to British Steel pensioners.
• February 2023 – 15 more firms named in the row over the redress scheme.
• February 2023 – Two firms, Abbey Lane Financial Associates Limited and Estate Capital Financial Management Limited, forced to stop making deceptive offers to British Steel pensioners.
• January 2023 – Warning issued to firms over a ‘deliberate attempt to exclude’ pensioners from the compensation scheme.