FCA bans IFA firm from regulated activity over SIPP transfers

Last year, the FCA visited the firm after obtaining information about pension switching advice which had resulted in customers switching their pensions to SIPPs with the underlying investments in high risk, unregulated investments.

The Authority had serious concerns about the suitability of the Bank House’s pension advice and asked it not to carry on any activities in relation to pension switches or transfers to SIPPs until it could prove that a robust and compliant advisory process was in place.

The firm was also told not to dispose of, deal with or diminish the value of any of its assets without the prior consent of the Authority.

The FCA later found that the firm had conducted pension switches to a SIPP account contrary to the terms of the Voluntary Requirement.

Information obtained from the SIPP provider showed the firm had advised 72 customers on 78 transactions involving pension switches to a SIPP account with that provider in October 2016. The total value switched was approximately £2.65 million.

However the firm’s new business register recorded only 29% of the 78 transactions reported by the SIPP Provider up to 21 September 2016. In October, the firm also advised five customers to switch pensions to SIPP accounts offered by two other firms.

When questioned about the pension switches done to the account offered by the SIPP Provider, the firm said it understood that the account “was not a SIPP, it was personal pension with a deferred SIPP option”. The FCA confirmed with the provider that it does not offer the option of a deferred SIPP in any of its accounts and that all 78 switches on which the firm advised were to a SIPP account.

It also failed to provide details about a third party firm which it sourced leads from.

Finally, the firm had not paid regulatory fees totalling £22,859.29 which were due as at 13 August 2016 and has told the FCA it is unable to pay them due to its financial circumstances. The firm’s draft management accounts show it made a loss of £137,087.39 in the year ending 31 May 2016. The firm has also approached the authority for consent to a sale of its client book.

As a result, the regulator says it is concerned about the adequacy of the firm’s financial position and the risk of dissipation of its assets, which contributed to its decision to prevent the firm from carrying out regulated activities.