Financial planning firm fined for unsuitable pension advice

The regulator said that LJ Financial Planning (LJFP) failed to consider whether a SIPP was suitable and whether the investments were suited to the customer's needs and risk appetite

The Financial Conduct Authority (FCA) has fined LJ Financial Planning (LJFP) £107,200 for providing its customers with unsuitable pension switching and transfer advice and for failing to manage its conflicts of interest.

LJFP, based in Warrington, advised 114 customers to transfer their pensions into self-invested personal pensions (SIPPs) between March 2010 and December 2012.

The firm did not provide any advice on the underlying investments that were to be held in those SIPPs, the FCA said, and the investments were often high-risk, esoteric and illiquid.

The regulator said that, when advising the clients, LJFP failed to consider not just whether a SIPP was suitable, but also whether the investments held within that SIPP were suited to the customer's needs and appetite for risk.

The firm knew the risk of the investments, according to the FCA, but was not prepared to advise customers on the underlying investments. The regulator also reported that one senior employee wrote in an email to the firm's compliance partners that it did "not want to know" what those investments were.

In addition, the financial watchdog also found that LJFP failed to take reasonable care to ensure the suitability of its advice for the customers who the FCA said should have been able to rely upon the advice given. By failing to do so the firm breached Principle 9 of the FCA's Principles for Businesses.

To date, the financial planning firm has paid redress of more than £2.6m to 41 customers who have lost out because of this failing, according to the FCA. LJFP will be conducting a customer contact exercise in relation to the remaining clients.

In addition, the watchdog found that, between January 2013 and November 2017, LJFP failed to ensure it "identified and managed" potential conflicts of interest fairly between itself and its customers, which breached Principle 8 of the FCA's Principles.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: Investors should be able to trust their financial advisers with the pension contributions they've built up over a lifetime of hard work. These failings were especially serious because LJFP facilitated the transfer of these investors' pensions into high-risk investments without assessing whether the investments were suitable for investors.