£1m fine for pensions misselling

A leading financial adviser was fined £1.12m by the City watchdog for mis-selling pension-related products as the regulator warned some 800 of its customers faced “substantial” losses from the transactions.

The Financial Services Authority said AWD Chase de Vere Wealth Management recommended a series of pension transfers and pension annuities to customers who were already covered or whose attitude towards risk did not match the products they were pointed towards.

The adviser is one of the bigger independent financial advisers and made about 4,300 sales of pension transfers, pension annuities and income withdrawals to some 2,800 customers between February 2006 to October 2007 - the period under investigation .

Of those, the FSA estimates that approximately 800 customers may have received unsuitable advice relating to 1,200 sales. Although the value of the losses has not yet been quantified, the company admitted it is likely to be substantial.

The FSA said the problem was all the more serious for having come after the regulator had issued a series of warnings about the suitability of pensions advice, and also because the failings initially continued after they were first brought to the company’s attention by the regulator.

Margaret Cole, director of enforcement at the FSA, said the fine: “reflects that AWD Chase de Vere failed to establish its customers’ needs and did not provide them with complete and accurate information.”

The regulator is doe to publish shortly a study into pensions transfers which will provide examples of good and bad practice.

“Firms must take note of this work and amend their own processes where necessary,” said Ms Cole.

Mike Kirsch, chief executive of AWD Group, said the company regretted the lapses.

“Our new management team has worked very closely with the FSA to correct matters,” he said. “Fewer than 1 per cent of our clients have been affected and we are in the process of identifying all the cases and taking steps to address and compensate clients for any potential loss. I would like to apologise to all our clients who have been affected.”