The FCA has fined Inspirational Financial Management Ltd (IFM), which is in administration, £897,840.
IFM poorly advised people to transfer out of defined benefit (DB) pension schemes, including the British Steel Pension Scheme (BSPS).
Arthur Cobill, an adviser at IFM, and William Hofstetter, one of its directors, have been banned by the FCA from advising customers on pension transfers and pension opt outs. Mr Hofstetter has also been banned from holding any senior management function at any regulated firm.
Mr Cobill and Mr Hofstetter agreed to pay £120,000 and £40,000, respectively, to the Financial Services Compensation Scheme (FSCS) to contribute to compensation for IFM’s customers.
Between 8 June 2015 and 22 December 2017, IFM provided unsuitable pension transfer advice and failed to properly consider whether it would be in customers’ best interests to transfer out of their secure DB pensions. The firm operated a contingent charging model, only collecting fees if customers transferred out of their DB pension schemes following the firm’s advice. While this approach benefited IFM, Mr Hofstetter and Mr Cobill, it risked the long-term financial health and interests of their customers. A review by the FCA found that 83% of IFM’s pension transfer advice failed to comply with its minimum required standards, and customers risked financial loss as a result of the poor advice they received.
Out of 307 IFM customers advised to transfer out of their DB pension scheme, 261 completed the process. Mr Cobill advised 245 of those, including 198 members of the BSPS. In total, the BSPS members advised by Mr Cobill had pension benefits worth over £90 million.
Mr Hofstetter was responsible for the compliance oversight of IFM’s process for pension transfer advice.
Customers transferring out of the BSPS were already in a vulnerable position due to the uncertainty surrounding the future of their pension scheme, so it was critical that they received good advice.
Therese Chambers, Joint Executive Director of Enforcement & Market Oversight, said:
‘Pensions are the safety net people spend their lives building. For many customers, their DB pension was their most valuable asset, and it was their only retirement provision other than their state pension.
‘As experienced advisers, Mr Cobill and Mr Hofstetter, and IFM should have known better than to unravel this.
‘It is only right that Mr Cobill and Mr Hofstetter contribute towards compensating those affected.’
Notes to editors
- Final Notice 2024: Inspirational Financial Management Ltd (in administration)[1].
- Final Notice 2024: William Hofstetter[2].
- Final Notice 2024: Arthur Cobill[3].
- IFM went into administration on 30 November 2023. The FCA will give preference to creditors (some of whom may be consumers), ahead of its financial penalty on IFM, to maximise funds available for redress. The FCA recognises that there may be a significant liability for redress for IFM’s customers which will likely fall to the FSCS. In these circumstances, the FCA has agreed with Mr Cobill and Mr Hofstetter that in lieu of the imposition of a financial penalty, they will pay £120,000 and £40,000, respectively, to the FSCS to contribute towards any redress due to IFM’s customers. The FCA has also had regard to the means of the individuals in agreeing these payments.
- British Steel Pension Scheme - our approach to enforcement.[4]
- Information for customers wishing to make a claim to the FSCS about Inspirational Financial Management[5].
- Find out more information about the FCA[6].