he Financial Conduct Authority (FCA) has commenced civil proceedings against Avacade Limited and Alexandra Associates Limited for providing “misleading statements” on pensions investments.
In a statement, the FCA said the pair provided a pension report service to its customers, but in the process “made misleading statements, carried out regulated activities in the UK without FCA authorisation or exemption, and communicated financial promotions without the required authorisation”.
In 2016, while performing the service, Avacade Limited, currently in liquidation, promoted self-invested personal pensions, or SIPPs, as well as alternative investments such as tree plantations.
In addition, the FCA has also commenced civil proceedings against Craig Lummis, Lee Lummis and Raymond Fox for their known involvement in Avacade’s breaches, and against Craig Lummis and Lee Lummis for their involvement in the Alexandra Associate’s breaches.
Yesterday (29 November), Legal & General head of DC Client Solutions Simon Chinnery warned that pension savers switching from defined benefit schemes to defined contribution schemes on a non-advised basis could be the “next mis-selling scandal”.
Speaking at a Pensions Management Institute seminar in London, Chinnery highlighted the advice gap within the industry, and also noted the risk that the advice being given is not up to industry standard.
“The FCA are rightly concerned about a lot of money going out on a non-advised basis. There have been 220,000 DB transfers since 2015 and roughly 120,000 in 2017, and so far the money I have heard being transferred out is £50bn. so maybe it is the next miss-selling scandal,” Chinnery said.
“I have certainly heard stories of Independent Financial Advisors (IFAs) circling around companies and giving discounts, saying ‘give us your money and we will provide you with a SIPP’, and I think that is potentially going to be a mess.”
The FCA recently highlighted that half of the DB transfer cases it had reviewed were rated as suitable. Momentum speculated that the FCA focus on transfers means that ‘one size fits all’ methods are no longer effective.
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