The Financial Conduct Authority has banned Nigel Lewis and Susan Jones of West Wales Financial Services Limited from advising customers on pension transfers and pension opt-outs.
Lewis has also been banned from holding any senior management functions in a regulated firm.
Between March and December 2017, the regulator found that WWFS provided “unsuitable” pension transfer advice based on the “incorrect assumption” that it would be in their customers’ best interests to transfer out of their secure defined benefit pension.
Jones advised 27 of 28 customers to transfer out of their defined benefit pension scheme, 25 of whom were members of the British Steel Pension Scheme (BSPS).
In total, £9,769,550 of pension funds were transferred to riskier defined contribution schemes.
As part of his oversight role, Lewis was responsible for ensuring that WWFS provided suitable advice and to take reasonable steps to ensure advice was suitable. He failed to do so.
The FCA intervened and stopped WWFS from processing transfers for a further 141 customers, all of whom were members of the BSPS.
The regulator said that, had it not been for its intervention, the risk of loss would have continued and these customers may have transferred out funds totalling £43.7m.
Lewis and Jones will pay £26,800 and £40,888, respectively, to the Financial Services Compensation Scheme (FSCS) to contribute towards the compensation owed to WWFS customers.
FCA joint executive director of enforcement and market oversight Therese Chambers said the two had performed a “double act of carelessness and incompetence” that put people’s “hard-earned pensions at risk”.
The FCA said it would have imposed a financial penalty of £38,300 on Lewis, reduced to £26,800 as he agreed to settle at an early stage of the investigation for a 30% discount.
It would also have imposed a financial penalty on Jones of £64,614.
However, there is “significant liability” for redress for WWFS’s customers which has fallen to the FSCS.
As at 21 November 2023, the FSCS has paid out £758,725.55 in compensation to customers of WWFS.
Had it not been for the compensation limit of £85,000, the total compensation available to customers would have been £972,197.28.
West Wales Financial Services is in liquidation. According to Companies House, a voluntary liquidator was appointed on 7 August 2021.
“They would have continued to provide bad advice to many more had it not been for the FCA’s timely intervention,” said Chambers.
“People need someone they can trust to give them informed advice on their financial future – and it’s not these two.”
