FCA fines Pembrokeshire Mortgage Centre Ltd £2.4m for serious failings in relation to the British Steel Pension Scheme

The FCA’s view is that most people should keep the guaranteed income provided by a DB pension. PMC advised 420 consumers, nearly two-thirds of whom were BSPS members, on whether to transfer out of their DB scheme. Overall, 93% were advised to transfer. PMC earned over £2 million in transfer and ongoing advice fees.

Many of the people advised were in a vulnerable position due to the uncertainty surrounding the future of BSPS and the short timescale they had to make a decision. However, they did not receive the quality of advice they needed to make an informed decision.

They needed clear, objective and expert advice. Instead, PMC gave unsuitable advice in 60% of cases, even higher than BSPS as a whole.

Mark Steward, Executive Director of Enforcement and Market Oversight, said: 'Pembrokeshire Mortgage Centre advised hundreds of consumers to give up valuable defined benefit pensions without any adequate justification or rationale, using generic, templated advice not tailored to the specific circumstances of their customers while earning fees in doing so.

'The quality of advice seen here was woeful. The failings were particularly egregious in the context of the British Steel Pension Scheme, where customers were in an unusually vulnerable position. The FCA’s investigation into the involvement of others in these matters remains ongoing.

'Any consumers who were advised to transfer should contact the Financial Services Compensation Scheme to see if they are owed redress.'

The failings included the provision of generic suitability reports that were not tailored to the circumstances of individual consumers and contained contradictory, misleading and confusing statements. PMC also failed to have adequate resources to deal with the increase in cases caused by BSPS, further impacting the quality of advice provided.

Many consumers were advised to transfer out even though they were relying on the guaranteed income to fund their retirement and could not afford to bear the risk of transferring out. This included those who needed the money to provide for dependents needing long-term care.

PMC is currently in liquidation. The FCA will give preference to creditors (some of whom may be consumers), ahead of its financial penalty, to maximise funds available for redress. 

The FCA continues to progress c.30 ongoing enforcement investigations into firms and individuals relating wholly or partly to BSPS advice, all of which are at a very advanced stage and some are in litigation.

Notes to editors

1. Final Notice: Pembrokeshire Mortgage Centre Limited[1]
2. 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.
3. The total value of the transferred funds on which PMC gave advice was approximately £123 million, with an average transfer value per customer of approximately £293,000 (£314,000 for British Steel Pension Scheme members).
4. As of 30 November 2022, the Financial Services Compensation Scheme (FSCS) has upheld 213 Pension Transfer claims against PMC and paid out over £13.3 million in compensation.
5. FCA evidence found that 46% of BSPS transfers were unsuitable.
6. The overall FSCS uphold rate in relation to Pembrokeshire Mortgage Centre was 88%. In 80 cases (38%), the FSCS awarded the claimant the maximum compensation available of £85,000. Had it not been for the compensation limit of £85,000, the total compensation payable to customers would have been approximately £14.6 million.
7. On 28 November the FCA published final rules for a redress scheme for former members of the BSPS who received unsuitable advice to transfer out of their DB scheme. The FCA is providing a tool that firms will have to use to calculate redress payments. Customers of firms in liquidation should contact the FSCS.
8. More on the BSPS redress scheme[2].
9. Decision notice against Geoffrey Edward Armin[3].
10. Civil proceedings in relation to Estate Matters Financial[4].
11. Find out more information about the FCA.