The Financial Conduct Authority (FCA) has censured Lighthouse Advisory Services Limited for the unsuitable advice given to people looking to transfer out of defined benefit (DB) pension schemes, including members of the British Steel Pension Scheme (BSPS).

According to the FCA, 53 per cent of advice provided to BSPS members from April 2015 to April 2019 was unsuitable, higher than the industry average unsuitable BSPS advice levels (46 per cent).

The FCA's investigation found that many of those Lighthouse advised were relying on their BSPS pension as their main source of retirement income, and were in a vulnerable position due to uncertainty around the scheme.

Although Lighthouse had two advisers partially based on site at the British Steel works in Scunthorpe, the watchdog argued that the advisers did not challenge BSPS members’ reasons for transferring or properly consider alternatives to meet their retirement objectives.

In addition to this, the FCA found that, in some cases, the advisers failed to provide evidence as to why a transfer would be in members’ best interests.

Similar failings in the advice process were found for other, non-BSPS customers, with 28 per cent of that advice found to be unsuitable.

In total, Lighthouse advised 1,567 customers during the period 1 April 2015 to 30 April 2019, 262 of whom were members of the BSPS.

Although Quilter Financial Planning acquired Lighthouse in June 2019, after the unsuitable advice, the firm has taken responsibility for the unsuitable advice provided before its purchase and proactively carried out a redress exercise.

As part of this, Quilter has already paid out around £23.17m in redress (as of 30 April 2023), in an effort to put customers back in the financial position they would have been in were it not been for Lighthouse’s unsuitable advice.

A further £0.44m has also been offered to affected customers, which the FCA confirmed is "far in excess" of the fees Lighthouse received for the unsuitable advice.

Since Quilter acquired Lighthouse, the firm also replaced Lighthouse’s senior management team and its internal processes in relation to defined benefit transfer advice.

FCA executive director of enforcement and market oversight, Therese Chambers, stated: “Many consumers were wrongly advised by Lighthouse to transfer out of their valuable guaranteed pensions.

“Given the vulnerable position of consumers transferring out the British Steel Pension Scheme, the firm should have taken real care in providing advice – it failed to do so.

“Quilter deserves full credit for taking responsibility for unsuitable advice given before they bought Lighthouse and for the proactive way in which they’ve worked with the FCA to put it right.”

Adding to this, Quilter chief executive officer, Steven Levin, stated: “Although the relevant advice pre-dated our acquisition of Lighthouse, we have fulfilled our commitment to ensuring that Lighthouse has responded to this situation in a way that is consistent with our values.

"We are pleased that the FCA recognised our co-operation with its investigation and that we have proactively and promptly paid redress to affected customers.”

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