The FCA has banned Simon Hughes of S&M Hughes Limited (in liquidation) from advising customers on pension transfers and pension opt outs, and from holding any senior management function in a regulated firm.
Mr Hughes will also pay £158,600 to the Financial Services Compensation Scheme (FSCS) to contribute to redress due to his customers, most of which were members of the British Steel Pension Scheme (BSPS). The FSCS has so far paid out over £8.4 million in compensation to Mr Hughes’ customers for the unsuitable advice they received.
Mr Hughes was solely responsible for the pension transfer advice provided by the firm in his role as pension transfer specialist and financial adviser. Between April 2015 and May 2019, 232 out of a total of 287 customers were advised to transfer out of their defined benefit pension scheme, including 188 BSPS customers. This is despite FCA guidance stating that, as a starting point, it should be assumed that such transfers are not in customers’ best interests.
Mr Hughes did not have a reasonable understanding of the alternative options available to BSPS customers and gave undue weight to the customers’ stated desire to transfer their pension.
He also failed to obtain the necessary information relating to the customers' financial situation and failed to properly assess whether customers would be reliant on the income from their DB pension and whether they could bear the risks associated with a pension transfer. He also recommended transfers to customers without adequately considering if the transfer met the customers’ stated objectives.
The FCA found that Mr Hughes failed to act with due skill, care and diligence.
Therese Chambers, joint director of Enforcement and Market Oversight at the FCA, said:
'The decision to transfer out of a DB pension scheme is a potentially life changing one and it’s vital that customers get suitable advice. Mr Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided.
'BSPS customers were particularly vulnerable, and Mr Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.'
Any customers who were advised to transfer by S&M Hughes Limited should contact the FSCS to see if they are owed compensation.
Notes to editors
- Final Notice 2023: Simon Richard Hughes[1].
- British Steel Pension Scheme - our approach to enforcement[2].
- As at 28 July 2023, the FSCS has paid out £8,415,317 in compensation to customers of S&M Hughes Limited (in liquidation). Had it not been for the compensation limit of £85,000, the total compensation available to customers would have been £10,482,437.
- Information for customers wishing to make a complaint to the FSCS[3].
- Find out more information about the FCA.