The UK City watchdog has fined independent financial advice firm LJ Financial Planning (LJFP) for providing its customers with unsuitable pension switching and transfer advice and failing to manage its conflicts of interest.
The Financial Conduct Authority (FCA) stated that the company had failed to provide advice on underlying investments where self-invested personal pensions would be held for 114 custromers between 2010 and 2012.
That was despite these investments often being high-risk, esoteric and illiquid, according to the FCA. The total amount invested in this way by LJFP’s customers was just over £6m.
The regulator argued that the firm had neglected to consider whether or not the these investment were suitable fore the individuals who made the investments, which was something LJFP was required to do.
To date, LJFP has paid redress of £2,668,819.97 to 41 customers who have been impacted by this failing. LJFP will be conducting a customer contact exercise in relation to the remaining customers in order to assess their eligibility for redress.
Moreover, the financial markets watchdog stated that between January 2013 and November 2017, LJFP also failed to ensure that it identified and managed potential conflicts of interest fairly between itself and its customers.
“Investors should be able to trust their financial advisers with the pension contributions they’ve built up over a lifetime of hard work,” said Mark Steward, executive director of enforcement and market oversight. “These failings were especially serious because LJFP facilitated the transfer of these investors’ pensions into high-risk investments without assessing whether the investments were suitable for investors.
“In many instances, these investments are now worthless and many investors are approaching or already in retirement and so especially vulnerable to the risk of significant losses. Redress is important but these investors should never have been placed in this position in the first place. Investors should also be able to rely on their financial advisers to manage conflicts fairly and to disclose them so investors are able to make better informed decisions.”
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