FCA fines compliance oversight officer for pension transfer failings

The Financial Conduct Authority (FCA) has today fined David Watters £75,000 for failing to exercise due skill, care and diligence in his role as compliance oversight officer, firstly at FGS McClure Watters (FGS) and then Lanyon Astor Buller Ltd (LAB).

Following an investigation, the FCA found that Mr Watters failed to take reasonable steps to ensure that the process in place at FGS and LAB, for giving advice on Enhanced Transfer Value (ETV) pension transfer exercises, was adequate and met regulatory standards.  This led to a serious risk of unsuitable advice being given to customers of FGS and LAB about the merits of transferring their pension, from a defined benefit (DB) to a defined contribution (DC) scheme, as part of an ETV pension transfer exercise.  

Approximately 500 customers that received advice from FGS or LAB transferred their pensions from a DB scheme to a DC scheme, with a combined value of approximately £12.7 million.  In many cases, it may have been unnecessary for customers to leave their DB schemes, thereby losing their guaranteed benefits.

Mr Watters failed to give sufficient consideration to whether the advice process was compliant; he did not take reasonable steps to gain a sufficient understanding of the relevant regulatory requirements; and did not obtain an appropriate third party review of the processes to ensure compliance. Mr Watters also failed to take reasonable steps to ensure that advisers were properly monitored to reduce the risk of unsuitable ETV pension transfer advice being given to customers.

ETV exercises incentivise customers to transfer their pensions.  During these exercises, it is vital that customers considering giving up their guaranteed benefits are given suitable advice on the real benefits and consequences so that they can properly conclude whether a transfer is in their best interests.

Mark Steward, Executive Director of Enforcement and Market Oversight said:

“It was Mr Watters’ responsibility to take reasonable steps to put in place a compliant advice process.  His failure to do this placed customers at risk of needlessly losing valuable benefits for their retirement.” 

LAB has agreed to contact affected customers and where loss has been caused, it will pay appropriate redress.

Notes to editors

  1. Final Notice 2017: David Samuel Watters
  2. Any customers of FGS or LAB who have questions or concerns about their transfer from a DB pension scheme to a DC pension scheme as part of an ETV pension transfer should contact LAB.
  3. In 2008, the business of FGS was transferred to LAB and FGS is no longer an authorised firm. All FGS customers who transferred from a DB to a DC scheme as part of an ETV pension transfer exercise will be included in the customer contact exercises.
  4. The FCA recently published Consultation Paper: Advising on Pension Transfers (CP17/16) on how advice should be provided to consumers on pension transfers where consumers have safeguarded benefits.
  5. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  6. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  7. Find out more information about the FCA.