FCA fines and bans former pension switching adviser

The Financial Conduct Authority (FCA) has fined former Consumer Wealth director and senior financial adviser, Omar Hussein, £116,000 and banned him from working in financial services for providing reckless and unsuitable pension switching advice.

Hussein was found to have advised 620 customers to switch their pensions into a self-invested personal pension (Sipp) containing “significant” investments in Portfolio 6, an investment offered by Greyfriars Asset Management.

The FCA found that he advised customers when it was “often unnecessary and not in their best interest”, and put an estimated £13.5m of Consumer Wealth customers’ retirement savings at risk.

Consumer Wealth has ceased trading and is in liquidation. The Financial Services Compensation Scheme is investigating claims by affected customers and has paid compensation to 437 of them so far.

Portfolio 6 was a “high-risk” investment made up of unregulated mini-bonds relating to overseas investments in car parks, renewable energy and holiday resorts.

The regulator noted that the investments were illiquid and highly likely to be unsuitable for the firm’s target market of financially inexperienced investors with a low net worth.

Several of Portfolio 6’s underlying mini-bond investments failed and it was closed to new investment in 2016, with Greyfriars going into administration in 2018.

According to the FCA, Hussein disregarded clear statements and risk warnings in Greyfriars’ promotional material about Portfolio 6 and claimed that the customers investing in it were experienced, while also charging fees to customers for an ongoing advice service that was not provided by the firm.

Hussein’s failings were “particularly serious” because of the FCA’s findings that he acted recklessly and abused a position of trust when advising financially inexperienced clients, and because he was aware of the regulator’s pension alerts.

“Consumers work hard over many years to save for their retirement and unsuitable pensions advice can significantly impact their quality of life in retirement – or their ability to retire at all,” commented FCA executive director for enforcement and market oversight, Mark Steward.

“Mr Hussein acted recklessly and abused the trust of his clients by taking unjustifiable risks with their retirement savings. He has proven himself unfit to work in the financial services industry.”

Hussein was to be fined £165,797, but agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount.

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