The Financial Conduct Authority (FCA) has banned Paul Steel of Estate Matters Financial Ltd (EMF) for unsuitable defined benefit transfer advice with £850k to be paid in redress to the Financial Services Compensation Scheme (FSCS).
Steel offered unsuitable advice to customers regarding the transfer of defined benefit pension schemes, such as the British Steel Pension Scheme (BSPS).
According to the FCA, he also showed a lack of honesty and integrity by selling his client book to himself for less than it was worth. This meant that consumers who had suffered losses as a result of the bad advice could not seek compensation from EMF.
Over 480 clients received defined benefit transfer advice from EMF between 2015 and 2018, and over £140m in pension assets were transferred as a result. However, this advice did not meet the necessary requirements. Steel failed to gather the proper data or disclose the transfer risks when giving the recommendation.
The FCA filed a lawsuit in the High Court demanding compensation for customer losses and successfully sought and received a freezing injunction. It consented to end such legal actions in exchange for Steel’s promise not to challenge the FCA’s fines.
Steel was given a £3,694,400 fine by the FCA, which it decided not to enforce in exchange for £850,000 to the FSCS. According to the FCA, if this settlement had not been reached, the majority or entirety of Steel’s assets would have been depleted by the High Court proceedings rather than being used to provide compensation to consumers.
FCA joint executive director of enforcement and market oversight Therese Chambers says: “Mr Steel failed to provide suitable pension transfer advice. But he also failed to act with honesty and integrity when he improperly sold the firm’s assets for less than their value – to himself – so that he could enjoy the profits of the business without the burden of the risks that he had created.
“We are determined that those who fail in their duties to their customers take responsibility for paying towards redress and do not expect the FSCS, and the vast majority of firms who do the right thing, to pick up the tab for their failings.”
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