The FCA has censured Quilter-owned Lighthouse Advisory Services Limited for serious advice failings in relation to the British Steel Pension Scheme (BSPS) which resulted in £23m paid in redress to clients.

However, the FCA has decided not to impose a financial penalty on Quilter/Lighthouse after the firm co-operated fully with the investigation and compensated clients.

The watchdog censured Lighthouse for unsuitable advice given between 1 April 2015 and 30 April 2019.

Lighthouse advised people looking to transfer out of defined benefit pension schemes, including members of the BSPS.

During the period, Lighthouse advised 1,567 customers, 262 of whom were members of the BSPS.

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

By 30 April this year, Quilter had paid approximately £23.17m in redress. The money put affected Lighthouse customers back in the financial position they would have been in were it not for Lighthouse’s unsuitable advice.

A further £440,000 has been offered to affected customers, more than 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 people 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, the FCA said. Lighthouse’s advisers did not challenge BSPS members’ reasons for transferring or properly consider alternatives to meet their retirement objectives.

In some cases, Lighthouse advisers failed to provide evidence as to why a transfer would be in members’ best interests.

As a result of the failures, 53% of advice provided to BSPS members from April 2015 to April 2019 was unsuitable – higher than the 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.”

She added that 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.”

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

Read more information about the British Steel pension redress scheme. 

In a statement today, Quilter noted the FCA's decision concludes its enforcement investigation into whether Lighthouse Advisory Services Limited (Lighthouse) breached FCA requirements in connection with advising on and arranging defined benefit pension transfers from 1 April 2015 to 30 April 2019. Quilter said the pension transfer advice that gave rise to the FCA’s decision was provided by Lighthouse prior to the acquisition of Lighthouse Group plc (Lighthouse’s parent company) by the company’s subsidiary, Quilter Financial Planning Limited, in June 2019.

Quilter’s chief executive Steven Levin said: “Although the relevant advice pre-dated our acquisition of Lighthouse, we have fulfilled our commitment to ensuring that Lighthouse has responded to this situation in a way that is consistent with our values. We are pleased that the FCA recognised our co-operation with its investigation and that we have proactively and promptly paid redress to affected customers.”