The Financial Conduct Authority (FCA) fined the struggling Inspirational Financial Management Ltd. (IFM) £897,840 for poorly advising its members on fund transfers from its defined benefit pension schemes. Included was the British Steel Pension Scheme. IFM is currently under administration.
FCA Slaps Fine of Almost £900,000 on Embattled IFM
According to the financial watchdog, it banned Arthur Cobill, an IFM adviser, and William Hofstetter, an IFM director, from advising customers on pension transfers and opt-outs. Hofstetter was also prohibited from holding a senior position at any regulated financial company.
Cobill agreed to pay £120,000 and Hofstetter £40,000 to compensate IFM’s customers. The regulator said that, between 8 June 2015 and 22 December 2017, IFM offered unsound defined benefit pension transfer advice and did not consider the best interest of its customers.
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An FCA investigation revealed that the company could only collect fees if its customers transferred money out of their defined benefit pension schemes after being advised to do so. That benefited the company but risked the financial well-being of IFM customers. The FCA found that 83% of IFM’s pension transfer advice did not comply with the minimum required standards.
Two hundred and sixty-one IFM customers completed the transfer process. Of these, 198 were British Steel Pension Scheme members with pension benefits worth more than £90m. In its media release, the FCA commented:
Pensions are the safety net people spend their lives building. For many customers, their DB pension was their most valuable asset, and it was their only retirement provision other than their state pension.
