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  • March 2015
03

Advisers banned for pension advice failings

Open-access content Friday 20th March 2015 — updated 2.38pm, Thursday 30th April 2020

Two pension advisers have been banned from holding senior positions in financial services, following an investigation by the Financial Conduct Authority (FCA).

The regulator said Lloyd Pope and Peter Legerton, both former directors from advisory firm TailorMade Investment (TMI), failed to manage a number of conflicts and to ensure whether investments were suitable for the firm's customers from self-invested personal pensions (SIPPs).

The FCA fined Pope £93,800 but Legerton, after providing evidence that he would suffer from financial hardship, had his penalty reduced to nil. The FCA said Legerton would have been fined £84,000.

The FCA found both men failed to oversee TMI's compliance function, which had been outsourced to external consultants. 

It also said the firm advised customers on transferring their existing pension funds into unregulated investments such as "green oil", biofuels, farmland and overseas property. Between 2010 and 2013, 1,661 customers invested more than £112m in these areas and, according to FCA, "many of these were not typically permitted by their existing pension schemes".

The regulator also found both men were responsible for managing a number of conflicts. For example, Legerton received commission when these investment products were sold to customers directly or through an unregulated firm. During the relevant period, Legerton's total income from TMI was £300,567. The FCA said these payments created a "conflict of interest and should have been identified, then disclosed to customers", but no disclosure was made. 

The issue was exacerbated by Pope and Legerton's failure to act quickly when external compliance consultants warned them they needed to disclose conflicts of interests to their customers. 

Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: "Pope and Legerton exposed customers to risky investments without considering if these products met their needs. Their actions mean many customers face losing all of their hard-earned pension funds. They fell woefully short of the standards we expect of senior individuals."

TMI has gone into liquidation. The Financial Services Compensation Scheme (FSCS), a compensation fund, is investigating claims made by TMI's customers.

This article appeared in our March 2015 issue of The Actuary.
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