FCA censures Lighthouse Advisory Services Limited for serious failings in relation to the British Steel Pension Scheme and £23m paid out in redress

The Financial Conduct Authority (FCA) has censured Lighthouse Advisory Services Limited (Lighthouse) for the unsuitable advice given during the period 1 April 2015 to 30 April 2019 to people looking to transfer out of defined benefit pension schemes, including to members of the British Steel Pension Scheme (BSPS). During this period, Lighthouse advised 1,567 customers, 262 of whom were members of the BSPS.

Quilter Financial Planning Limited (Quilter) acquired Lighthouse in June 2019, after the unsuitable advice. Quilter has however taken responsibility for the unsuitable advice provided before its purchase of Lighthouse and has proactively carried out a redress exercise.

By 30 April 2023, Quilter had paid approximately £23.17 million in redress to put affected Lighthouse customers back in the financial position they would have been in were it not been for Lighthouse’s unsuitable advice. A further £0.44 million has been offered to affected customers. This is far in excess of the fees Lighthouse received for the unsuitable advice.

Lighthouse had two advisers partially based on site at the British Steel works in Scunthorpe. Many of those Lighthouse advised were relying on their BSPS pension as their main source of retirement income. Many were in a vulnerable position due to uncertainty around the scheme.

Lighthouse’s advisers did not challenge BSPS members’ reasons for transferring or properly consider alternatives to meet their retirement objectives. In some cases, they failed to provide evidence as to why a transfer would be in members’ best interests. As a result of these failures 53% of advice provided to BSPS members from April 2015 to April 2019 was unsuitable – higher than industry average unsuitable BSPS advice levels (46%).

Similar failings in the advice process were found for other, non-BSPS customers, with 28% of that advice found to be unsuitable.

Therese Chambers, Executive Director of Enforcement and Market Oversight, said: 'Many consumers were wrongly advised by Lighthouse to transfer out of their valuable guaranteed pensions.

'Given the vulnerable position of consumers transferring out the British Steel Pension Scheme, the firm should have taken real care in providing advice – it failed to do so.

'Quilter deserves full credit for taking responsibility for unsuitable advice given before they bought Lighthouse and for the proactive way in which they’ve worked with the FCA to put it right.'

Quilter provided very high levels of cooperation to the FCA during the investigation. Together with its proactive redress exercise, FCA therefore considers a censure to be the appropriate outcome.

Since Quilter acquired Lighthouse, Quilter has replaced Lighthouse’s senior management team and its internal processes in relation to defined benefit transfer advice.

Notes to editors

  1. Final notice 2023: Lighthouse Advisory Services Limited
  2. The FCA found that Lighthouse breached Principle 9 (Customers: Relationships of Trust) of its Principles for Businesses between 1 April 2015 and 30 April 2019.
  3. The total value of the Defined Benefit Pension Schemes on which LAS gave advice was £655,046,598 with an average transfer value of approximately £325,295 for non-BSPS Pension Transfer customers and approximately £482,603 for BSPS customers.
  4. A DB pension is a valuable investment with advantages that cannot be replicated by other investments. Strong reasons are required for it to be suitable for a person to exit a DB pension scheme in favour of another investment.