Prior to 31 December 2020, Abana passported into the UK on a services basis. AUL’s passport only covered insurance intermediation in the UK.

FSCS said it has determined that AUL “undertook regulated activities for customers outside of AUL’s insurance intermediation permissions in the UK”.

“These regulated activities included arranging pension transfers, notably into the Avalon & Westerby self-invested personal pensions (Sipps), both UK-based Sipp providers”, the UK lifeboat scheme added.

Parent company of the Avalon Sipp, Avalon Investment Services, entered administration in February 2016, after it lost a civil claim brought against it by businessman Michael Bennett. It was declared failed by the FSCS in 2020.

International Adviser contacted Westerby Group for a comment but it did not reply in time for publication.

Customer claims against AUL

The FSCS said that protection may exist for customers where:

• AUL arranged and / or advised a customer’s pension transfer in the UK, and through AUL’s agent(s), with the pension transfer into the Avalon Sipp; and
• The claim meets the qualifying conditions for paying compensation under our rules as set by the Financial Conduct Authority (FCA).

The UK lifeboat scheme said that there is evidence to suggest that after late May 2014, AUL “was not liable for the acts / omissions of its agent(s) in arranging / advising customer pension transfers, and that those who did arrange the customer pension transfer after late May 2014 did so on a basis which FSCS protection does not extend to”.

Accordingly, while each claim will be considered on its merits, “some customer claims against AUL involving pension transfers after late May 2014 may not meet the qualifying conditions for FSCS to pay compensation”, it added.

The FSCS said it will write to those customers whose claims fall into this category.

The lifeboat scheme said it is also aware that the Financial Ombudsman Service (FOS) has issued decisions upholding customers’ complaints against Abana. Customers’ claims submitted to FSCS against Abana are considered on a case-by-case basis by FSCS and under its rules, which are different from FOS.

The FSCS added that it is currently only open to claims against AUL from customers who transferred their pension into the Avalon Sipp and not the Westerby Sipp.

This is because FSCS understands that Westerby Sipp is still a live entity. Any claims against AUL involving a transfer into the Westerby Sipp should be directed to Westerby Sipp, or the FOS as appropriate.

Wellington Court

In other news, the FSCS announced on 23 May that Ireland-based advice firm Wellington Court Financial Services has failed.

This comes nearly a year after the UK lifeboat scheme said it was investigating and considering customers’ claims against the firm.

Wellington Court had passported into the UK under the Insurance Distribution Directive. The firm had a UK establishment in Devon, which closed on 31 December 2021.

From 19 December 2016, Wellington Court had permission from the Financial Conduct Authority (FCA) to carry out certain regulated activities including advising on investments and pension transfers.

Prior to this date, it only had permission to carry out insurance mediation and insurance distribution activities.

The FSCS has been working with the FCA and the Financial Ombudsman Service FOS to “investigate the activities” of Wellington Court.

The FOS has upheld “a large number of complaints” against Wellington Court in respect of its involvement with the transfer of customers’ pensions into a Sipp administered by Guinness Mahon Trust Corporation (GMTC).

The FSCS told IA that there are 329 claims open which are largely pension/Sipp advice-related. It added that the firm has now been declared in default because its team identified a compensable claim.

Old Park Capital

Elsewhere, the FSCS also reported that London-based Old Park Capital Limited has failed.

Old Park Capital was an asset management firm founded in 2009. It also operated a business premises renovation allowance scheme.

The FSCS said there are currently eight investments-related claims open.

In a note published on Friday 12 May, it said its concerns had been heightened by more firm failures, often after Financial Ombudsman Service (FOS) decisions had identified failings.

The regulator outlined concerns about firm failures causing disruption of service for consumers or additional costs being passed on to them. It also pointed to consumers not receiving fair redress when due, particularly where firms have failed to undertake adequate due diligence.

In addition, the FCA raised the issue of pension scams and fraud and consumers being allowed to make investments which should not be accepted in their SIPP (including non-standard assets which fail or become illiquid and lose their value).

Lucy Castledine, interim director of consumer investments, acknowledged that firms had been “working hard” over the last three years but emphasised a “greater need” for high standards of conduct and to ensure that appropriate systems and controls, and operational and financial resilience are in place, along with operational and financial resilience, as well as preparing for the additional requirements that the consumer duty will introduce.

Expectations

The FCA set out its expectations for how advisers should deal with these issues, including proactive identification of consumers entitled to redress and ensuring they receive it promptly.

“The watchdog also said that when handling due-diligence complaints, advisers should take FOS guidance and decisions into consideration when deciding on their approach, and that where complaints or other analysis highlights systemic issues or where the firm has caused foreseeable harm to consumers, they should “…take whatever steps are necessary to meet the requirement to act in good faith towards those consumers.”

The UK regulator also highlighted its expectations on firms’ financial resources too, asking firms to ensure accurate calculation of liquid capital requirements, to consider risks in relation to adequacy of financial resources, to keep their wind-down plans up to date and to keep the regulator informed about concerns arising with regard to meeting debts.

Following a review of 30 firms last year, the regulator emphasised that firms should undertake “robust due diligence on intermediaries, assets and third parties involved in the distribution chain,” including ongoing monitoring, as well as “effective oversight of introducers, with additional scrutiny of any unregulated introducers to avoid foreseeable harm to consumers”.

It also urged firms to undertake “remedial actions” where required.

To avoid consumers accessing Sipps, where these are unsuitable for them, the FCA said that advisers should clearly identify and define target markets, consider the appropriateness of their distribution strategy and to establish when this would or would not provide fair value to retail customers and intended target markets.

Actions to be taken

Castledine concluded: “You are responsible for ensuring that your firm meets FCA requirements including the obligations and expectations set out above. You should take all necessary action to ensure these are met and that you are prepared for the additional requirements that the consumer duty will bring to these areas of priority.”

The FCA confirmed that it would use the senior managers and certification regime to engage with firms on areas of concern.

Castledine added: “You can expect to be asked to demonstrate how you have taken this letter into account in your firm’s work plan. We also expect to be informed proactively by you if work done on the above points result in remedial action or identification of harm.”

The award limit is the maximum amount the FOS can require a financial service firm to pay when it upholds complaints.

It is adjusted each year in line with inflation, as measured by the Consumer Prices Index (CPI).

Changes

From 1 April 2023, FOS award limits will go up to:

• £415,000 ($508,000, €470,000) for complaints referred to the FOS on or after 1 April 2023 about acts or omissions by firms on or after 1 April 2019
• £190,000 for complaints referred to the FOS on or after 1 April 2023 about acts or omissions by firms before 1 April 2019

The FOS said it will be updating the guidance on its website to reflect the changes from the 1 April.

‘Significant ramifications’

Lucy Tolond, partner of professional indemnity at legal services business DWF, said on Linkedin: “Whilst the award limit increases annually, the impact of inflation is such that this year’s increase is extremely high. Coupled with the FCA’s ongoing consultation on the complaint ‘gateway’ thresholds for SMEs, this could have significant ramifications for financial advisers and their insurers.

“Where claims for professional negligence exceed £100,000, they should generally be issued in the High Court rather than the County Court – the FOS will now have the power to award four times that amount, without hearing witness or expert evidence, and with the only route of appeal being a judicial review.”

Chief investment officer Nicholas Cooling will retire from the firm in May 2023 after more than 30 years with the business.

Sheldon MacDonald will take over, after joining the company in October 2021 as chief investment officer of multi-asset from Liontrust where he held several senior investment roles.

His appointment has been approved by the Financial Conduct Authority (FCA).

L&G

Chief executive Nigel Wilson is set to retire after serving in the role for more than a decade.

He joined Legal & General as chief financial officer in 2009 and was then promoted in 2012.

Wilson will continue working until a successor is found.

Quilter

Priti Verma will become chief risk officer at Quilter in Q2 2023.

Most recently she was at Brooks Macdonald where she held a similar role.

Verma will succeed Matt Burton who had to step back in 2022 due to ill health.

Capital Group

The investment management giant has shaken up its senior management team.

Tim Armour, chairman and chief executive, and Robe Lovelace, vice-chair and president, will step down in October 2023.

As a result, Mike Gitlin will become president and chief executive, Martin Romo will take on the role of chairman and chief investment officer, and Jody Jonsson will become vice-chair of Capital Group and continue working as president of Capital Research Management Company.

The appointment will be effective from 24 October 2023.

Fidelity International

The UK-based investment firm has promoted Dennis Pellerito to head of UK wholesale.

He has been with the company for a decade and was most recently director of the UK strategic account team.

Pellerito succeeds John Clougherty who will handover his responsibilities in March 2023 and retire in September.

Julius Baer

Sacha Bodenehr will become market head of Geneva as well as branch manager, effective from 1 February 2023.

He has held the roles in an interim basis so far, and has been with Julius Baer since 2003 in several roles including head CEO office, chief of staff (French-speaking Switzerland) and head of strategic projects for Europe.

BNP Paribas AM

The French asset manager has hired Daniel Choong as chief executive of its Malaysia operation, subject to regulatory approval.

He succeeds Angelia Chin-Sharpe who became Singapore chief executive and relocated to the Lion City in August 2022.

Choong joins from Abrdn where he served as head of distribution in Malaysia.

Financial Ombudsman Service

The Financial Conduct Authority has re-appointed baroness Zahida Manzoor as chair of the FOS, approved by the Treasury.

She has been in the role since August 2019 and will continue until August 2025.

Following a consultation, the UK regulator has confirmed that the temporary BSPS asset retention rules will be extended so that they continue to apply until firms have resolved all relevant cases that are subject to the rules of the BSPS consumer redress scheme and other relevant BSPS cases outside the scheme.

The FCA said that this intervention will “help ensure that the firms responsible for giving bad BSPS advice meet the cost of the redress liabilities that arise and reduce the risk that the firm fails with costs being passed to Financial Services Compensation Scheme (FSCS) levy payers”.

This will affect firms that provided ex-BSPS members with advice to transfer during the period of 26 May 2016 to 29 March 2018, subject to certain exclusions, and their insurers. This will include firms that are subject to the BSPS consumer redress scheme, plus firms whose BSPS complaints have been referred to the Financial Ombudsman Service (FOS) or are subject to a past business review, which are not in scope of the consumer redress scheme, but otherwise would have been.

The extended asset retention rules will apply from midnight on 31 January 2023. The current temporary asset retention rules continue to apply up to 31 January 2023.

In April 2022, the UK watchdog used its emergency powers to introduce the rules to prevent financial advice firms that advised on British Steel pension transfers from disposing of their assets.

The rules were introduced without consultation “in light of the risk that some firms will take steps to get rid of their assets” during the proposal period. The measures were designed to ensure advice firms will have adequate financial resources to pay any potential compensation to British Steel Pension Scheme (BSPS) victims.

Dear CEO letter

Elsewhere, the FCA has sent out ‘Dear CEO’ letters to pension providers and any other firm that administer or manage the proceeds of BSPS transfers.

This is to “ensure these third-party firms are aware of their obligations regarding the timely provision of information”, the regulator said.

As part of the redress scheme, pension providers and third-party firms may receive requests for information from advice firms.

The FCA said it expects them “to cooperate with these requests and comply with the obligations” and they “must take all reasonable steps to locate and provide the information asked for within any reasonable time periods requested”.

In any case, this is no later than four weeks after receiving the request. The FCA expects the product providers and third-party firms to have the necessary resources in place, including the ability to identify requests made under the scheme, before the scheme goes live, to be able to meet these obligations.

The FCA added: “There may also be cases where the Financial Ombudsman Service contacts you for information on behalf of an individual under the scheme. Where you receive information requests from the FSCS or the Financial Ombudsman Service, we expect you to cooperate with the request and respond in the same manner and within the same timelines as if the request had come from an advice firm.

“We will be monitoring the timeliness of firms in providing this information. We will consider taking action where we see evidence of material non-compliance with the rules. We will review a range of data sources. This includes the notifications that advice firms must provide of not receiving the information they require from third party firms within four weeks of asking.

“You should consider the contents of this letter and take any necessary action to ensure your firm complies with information requests from firms involved in the BSPS redress exercise, so that consumers achieve the outcomes they are entitled to.”

Redress scheme backlash

This all comes as the FCA faces a backlash over the BSPS redress scheme.

A group of pension advice firms launched a legal challenge against the  FCA over the setup of the British Steel redress scheme.

The companies are part of the British Steel Action Group and are being advised by FS Law.

The FCA said its decision to set up the redress scheme is “appropriate” and it will “vigorously defend it”. The watchdog criticised the move and accused the firms of taking legal action to “delay the payment of redress”.

The regulator also warned former BSPS members that it has received reports of certain firms making unsolicited redress offers to steelworkers who have not made complaints. It added that four companies that are part of the British Steel Action Group that “may be” engaging with ex-BSPS members.