- Our client, a wealth management firm, were issued with a S.166 Requirement Notice requiring them to provide an independent report by a skilled person. The nominated skilled person was required to assess all advice given in respect of pension transfers and pension/investment switches onto the firm’s investment platform during a defined period of time.
- Our recognised experience and expertise in the review areas led us to being nominated as one of the firm’s three selected partners submitted to the regulator. After a formal tender process we were appointed by the firm to undertake the skilled persons report, which was subsequently approved by the regulator.
- As per the Requirement Notice we needed to devise, recommend and implement a methodology for reviewing the advice given to clients for pension transfers and pension / investment switches.
- We needed to report on whether that advice was suitable, taking into account the FCA’s Principles for Business and relevant regulatory rules and guidance contained in the regulator’s Handbook at the time of the original advice.
- Firstly, we sought to define the size of the population to be used to develop a methodology for a sample review. Nearly 1,000 of the firm’s clients had been advised to transfer investment and pension business onto our client’s WRAP during the relevant period.
- We took a risk-based approach to file selection, and initially conducted a review of 50 cases. We reviewed all of the occupational pension and the off-shore bonds transfers, with the remainder of the files chosen based on the potential for consumer detriment.
- In line with the regulator’s guidance, we designed a case assessment form that would be used for each file review. The review of the cases found high levels of unsuitable advice with suitable advice only found in 7 of the 50 cases.
- Following the identification of unsuitable / unclear cases we worked with the regulator to develop a redress calculator and redress methodology. With our client, we devised a client contact strategy for all cases determined to be unsuitable or unclear, to ensure appropriate remedial action.
- We also developed a suite of letter templates to be used alongside this strategy. A ‘client informed position’ letter was sent to all clients with an unsuitable case grade. This letter outlined the concerns around the original advice and requested the clients to confirm if they required a full review of their case.
- Clients were given a total of four weeks to reply - if a reply was not received, the clients were sent a closure letter confirming that they still retained the right to complain about the firm at any point in future.
- As a result of our report, the high level of unsuitable advice and associated recommendation to the firm and FCA, the review was extended to cover a further 200 cases which included a wider selection of our client’s Appointed Representatives.
- During discussions, we kept both the firm and FCA informed on a regular basis; this facilitated a “no surprise” approach.
- Although the result of the review was distressing to the firm, they were able to provide clear, quick messages to their internal staff and Appointed Representatives to avoid any further repeat of the unsuitable advice.
- The firm increased their checking levels on a number of Appointed Representatives and made arrangements to augment existing quality checking resource with QCF Level 4 quality checkers.
- The firm has since received confirmation from FCA that they are happy to close the S166 review and return the firm back to normal supervision arrangements.