5 June 2020
Quilter plc (the Company) supports the announcement published today by the Financial Conduct Authority (FCA) to address weaknesses in the defined benefit (DB) transfer market, which will help promote better, industry-wide, customer outcomes. The proposal to ban contingent charging coupled with the introduction of an initial abridged advice process is a welcome move, which will provide clarity around charging, while ensuring DB transfer advice is focused on the cases where such advice is more likely to be suitable. Abridged advice is a similar concept to the Feasibility Service already undertaken by Quilter Group companies at the outset of a DB transfer advice process.
As the Company announced on 11 March 2020 as part of its preliminary results for the year ended 31 December 2019, a number of complaints have been received in relation to historic advice provided by its subsidiary, Lighthouse Advisory Services Limited (Lighthouse), to customers in relation to transfers out of the British Steel defined benefit pension scheme. These complaints relate to advice given by Lighthouse prior to the acquisition of Lighthouse Group plc (Lighthouse’s parent company) by the Company’s subsidiary, Quilter Financial Planning Limited, in June 2019 (the Lighthouse Acquisition).
The Company notes that the FCA’s statement referred to 30 enforcement investigations arising from concerns identified in the course of its programme of DB transfer work. The Company confirms that the FCA has commenced such an investigation into Lighthouse. The FCA is investigating whether Lighthouse has breached certain FCA requirements in connection with advising on and arranging DB pension transfers in the period from 1 April 2015 to 30 April 2019. The Company also confirms that the FCA has also required Lighthouse to appoint a skilled person under section 166 of the Financial Services and Markets Act 2000 to conduct a review of certain DB pension transfers advised on or arranged by Lighthouse in the period from 1 April 2015 to 27 January 2020.
The FCA investigation and skilled person review only relates to Lighthouse. The period of the FCA’s investigation covers the period before the Lighthouse Acquisition and the period of the skilled person review covers the period before the Lighthouse Acquisition up until 27 January 2020. That is the date on which Lighthouse's internal processes in relation to DB pension transfers were fully replaced by those of Quilter Group following completion of the Lighthouse Acquisition.
The Company and its subsidiaries (including Lighthouse) are fully co-operating with the FCA in relation to the investigation and skilled person review and the Company will update the market on the outcome of the investigation and review in due course.
Paul Feeney, CEO of Quilter, comments:
“Defined benefit pension transfer advice can be the single most important piece of advice that clients can receive and so it is important that regulation around it is clear and the FCA’s package of reforms is necessary. Quilter is committed to good customer outcomes and we will look to implement any necessary changes to our current process.
“Prior to our acquisition of Lighthouse in June last year, this business advised around approximately 300 British Steel pension scheme members to undertake a defined benefit transfer. Following the acquisition and an internal review of these cases, and complaints made prior to June 2017, concerns were raised about some of the advice given.
“We are now working with the FCA on this review into Lighthouse advice and our priority remains to do the right thing for our customers.”