Quilter CEO Paul Feeney. Picture: SUPPLIED
Quilter CEO Paul Feeney. Picture: SUPPLIED

London-listed Quilter said UK’s markets watchdog has launched a probe into its subsidiary Lighthouse Advisory Services in relation to advice to clients on transfers out of British Steel’s pension scheme.

Quilter, which is headed by Paul Feeney, confirmed the investigation into Lighthouse following the UK Financial Conduct Authority’s (FCA) ban on contingent charging on Friday. Contingent charging is when advisers only get paid if a transfer goes ahead.

“[Quilter] 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 defined-benefits pension transfers in the period from April 1 2015 to April 30 2019,” Quilter said in a statement to shareholders.

The FCA also requires Lighthouse to appoint a skilled person to conduct a review of certain defined-benefit pension transfers advised on or arranged by Lighthouse between April 1 2015 and January 27 2020.

Quilter, Old Mutual’s former wealth manager, acquired Lighthouse in 2019 in a bid to grow its advisory operations. It said the FCA’s investigation covers the period before its acquisition of Lighthouse, while the skilled person review covered the period before the acquisition up to January 27 2020.

The FCA said it is undertaking 30 enforcement investigations that have been raised as concerns in the course of its programme of defined-benefit transfer work.

“Samples of advice for each firm under investigation have been reviewed and this will both inform our decision-making and help conclude those investigations,” the FCA said.

“To address ongoing conflicts, advisers must now consider an available workplace pension as a receiving scheme for a transfer and, if they recommend an alternative solution, demonstrate why that alternative is more suitable. This will help reduce the need and costs for ongoing advice,” the FCA said in a statement on Friday.

It also proposes that advisers have abridged advice processes to help consumers access advice at affordable costs

Quilter and its subsidiaries are fully co-operating with the FCA in relation to the probe and said it welcomes the FCA’s move banning contingent charging.

Shares in the company were 3.79% stronger on the JSE and 2.84% higher in London.