Read IFA fined £150,000 for “pensions unlocking”

Up to 1,100 customers were put at risk by the failure of Read IFA to act in their best interests when it advised on pensions unlocking in the period September 2000 to January 2003. The FSA found that Read had not conducted its business with due skill, care and diligence: the firm did not ensure that its employees kept up to date with regulatory rules and Principles and, until January 2000, it attempted to restrict the advice to customers to early vesting transactions only, although required to give sufficient data to facilitate an informed decision that would include other ways to raise cash and only to recommend a course that was suitable to the customer. Read also failed to attend properly to the information needs of clients and to communicate details to them in a way that was clear, fair and not misleading: until June 2002 inadequate risk warnings appeared in its financial promotions about pensions unlocking and inappropriate statements about the product benefits featured in promotions between May and October 2002. The sentence, “So you can pay off debts, pay for home improvements, holidays or a new car – all without the costs of borrowing someone else’s money” featured in advertisements on at least 18 occasions but the risk that the customer’s pension income was likely to be diminished in consequence was not mentioned. The firm’s terms of business did not set out clearly its fee structure: “No reference was made in writing, in advance, to the fact that a charge of £450 might be payable if the customer received a suitability report but did not then proceed with the business.”The FSA also discovered deficiencies in Read’s fact find questionnaire during the period at issue: it did not request information about the customer’s available assets, access to disposable income and (until 2003) his or her income needs in retirement, which would have enabled assessment against current pension provision and of whether pensions unlocking was suitable.