An advice firm which had its pension transfer and switches activity restricted by the FCA has been declared in default by the Financial Services Compensation Scheme (FSCS) following its liquidation last year.
In April last year, Banffshire-based Moneywise Financial Advisors appointed Begbies Traynor as a liquidator.
This followed the FCA placing a number of investment and pension related restrictions on the firm, as its register entry has shown.
In October last year the firm was also declared in default by the FSCS, suggesting it was facing claims.
The firm’s FCA register entry said Moneywise ‘must not carry on any regulated activities in relation to pension switches and/or pension transfers to any self-invested personal pension scheme, including completing pipeline business… except where the member's funds are to be invested wholly in standard investments’.
Alfie Morrison, Moneywise’s former director, said his firm had previously carried out ‘some non-standard investments in the past’, but it agreed not to carry out any further advice on these investments.
The FCA register added: ‘The firm must immediately cease the regulated activities of advising on investments, arranging deals in investments, and making arrangements with a view to transactions in investments…until independent verification is provided to the FCA confirming that a robust and compliant advisory process is in place in respect of these regulated activities.’
It also said Moneywise must put in place ‘a process of ongoing independent pre-sale checks on all new investment advice’ and ‘conduct a review of the suitability of advice for pipeline customers’.
The FCA did say the firm could continue with advising on mortgages and general insurance.
It also said Moneywise ‘must not in any way dispose of, deal with or diminish the value of any of its assets without the prior consent of the FCA’.
Morrison said the reason for placing the firm into liquidation was because of increased costs as a result of the FCA restrictions such as increases to professional indemnity insurance (PII) costs and appointing a skilled person.
‘I appointed a liquidator because my investment revenue ceased until a skilled person was appointed and approved by the FCA,’ he said.
‘I had to make redundancies and pay out large sum of money for this. On top of my PII being increased and the cost of appointing a skilled person made the company in a position that it could not carry on trading.’
He added that the restrictions on the advice firm were not for the whole of its business.
‘The Moneywise restrictions were only on the investment side of the business and not on all my business; the mortgage and general insurance side had no restrictions,’ he said.
When approached, the FCA said it does not comment on individual cases.