Haverfordwest businessmen slapped with huge fine over risky pension advice

First published in News

TWO Haverfordwest financial advisers have been banned from working in the industry and fined more than £400,000 for pushing clients into unsuitable pension deals.

Andrew Rees and Timothy Hughes, who were partners at 1 Stop Financial Services, were found by the Financial Conduct Authority (FCA) to have convinced nearly 2,000 customers to invest in risky self-invested personal pensions (SIPPs).

Between October 2010 and November 2012, the pair helped customers invest more than £112million in unregulated investments such as diamonds and overseas properties.

They were also judged to have failed to properly explain to customers - many of whom were looking to plan a secure retirement - the risks involved.

FCA director of enforcement and financial crime Tracey McDermott said: “By enabling customers to invest in unregulated and often high risk products without assessing suitability, these men exposed customers to the risk of losing their hard-earned pension funds.

“This was then compounded by the partners’ failure to ensure that their customers fully understood these risks.”

The men also failed to disclose a conflict of interest, as they were directors and shareholders of a separate firm, Exclusive Global Investments Ltd (EGI), that referred almost a quarter of 1 Stop’s SIPPs clients.

By operating a second business in this way, the pair benefitted from both the fees paid by customers for the advice given by 1 Stop, and from commission received through EGI.

The firm has now ceased trading, and has applied to cancel its FCA permissions.

The pair have been fined £490,100, but have instead agreed to pay that amount to the Financial Services Compensation Scheme (FSCS), which is investigating redress claims by 1 Stop clients.

Hughes and Rees will also be writing to all customers to inform them of the situation.

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