The Financial Conduct Authority (FCA) has banned Simon Hughes of S&M Hughes Limited from advising customers on pension transfers and opt outs, and from holding any senior management positions in regulated firms, due to advice failings.

Hughes has also been told to pay £158,600 to the Financial Services Compensation Scheme (FSCS) to contribute to the redress due to his customers, most of which were members of the British Steel Pension Scheme (BSPS).

The FSCS has so far paid out more than £8.4m in compensation to Hughes’ customers for the unsuitable advice they received.

He was solely responsible for the pension transfer advice provided by the firm, which is now in liquidation, in his role as pension transfer specialist and adviser.

Between April 2015 and May 2019, 232 of the 287 total customers were advised to transfer out of their defined benefit (DB) pension schemes, including 188 BSPS customers.

According to the FCA, Hughes did not have a reasonable understanding of the alternative options available to BSPS customers and gave “undue weight” to the customers’ stated desire to transfer their pensions.

Furthermore, he failed to obtain the necessary information relating to their financial situations and did not properly assess whether the customers would be reliant on the income from their DB pensions and whether they could bear the risks associated with a pension transfer.

The FCA found Hughes recommended transfers to customers without adequately considering if the transfers met their stated objectives, and that he failed to act with due skill, care, and diligence.

“The decision to transfer out of a DB pension scheme is a potentially life changing one and it’s vital that customers get suitable advice,” commented FCA joint director of enforcement and market oversight, Therese Chambers.

“Mr Hughes demonstrated a high degree of incompetence and was grossly negligent in the advice that he provided.

“BSPS customers were particularly vulnerable, and Mr Hughes let them down badly. It is only right that he can no longer hold a senior role in financial services.”

Share Story: