The Financial Conduct Authority (FCA) has fined former Capital & Income Solutions (C&I) director, Philip Pryke, £1.38m for unsuitable pension transfer advice.

According to the Final Notice statement, C&I advised 986 customers to transfer out of their defined benefit (DB) pension schemes to an alternative arrangement between April 2015 and June 2019.

The FCA has also banned Pryke indefinitely from carrying out any regulated activity.

C&I, which went into liquidation in January 2020, arranged around £200m worth of transfers with an average value of £200,000.

The FCA found that many of these transfers may not have been in clients’ best interests and described Pryke as “reckless”.

It also stated that he has used the approximate £8m of fee revenue from the pension transfers to fund a “luxurious lifestyle”.

“The authority considers that Mr Pryke failed to act with integrity, paying scant regard to regulatory standards and requirements, choosing instead to prioritise the firm’s profitability (which took over £8m in fees) over the interests of its customers, thereby enabling him to fund a luxurious lifestyle,” the FCA said.

The FCA concluded that Pryke had failed to act with integrity and his failings meant that the personal recommendations he made did not comply with regulatory requirements and standards, which ultimately created a significant risk that his advice would not be suitable.

Pryke was found to have failed to obtain adequate information from customers relating to their financial situation, and made recommendations despite having failed to adequately assess customers’ attitudes to investment and transfer risks.

He also failed to adequately assess the suitability of pension transfers, gathered insufficient customer information to assess suitability, did not ensure an adequate and appropriate compliance monitoring system was in place, and did not maintain adequate customer files and business records.

“During the relevant period, C&I earned over £8.1m in gross revenue from those customers that it advised to make DB pension transfers,” the FCA said.

“This revenue consisted entirely of ‘contingent initial fees’. In the 12 months from 1 October 2017 up to 30 September 2018, pension transfer advice comprised at least 76 per cent of the firm’s revenue.

As at 20 September 2023, the Financial Services Compensation Scheme (FSCS) had received 1,300 claims made by C&I customers who were advised on DB pension transfers, had upheld 766 of the claims, and had paid out over £42.5m in compensation to its customers.

If not for the compensation limit of £85,000, the total compensation payable to customers would have been approximately £67m.

Pryke was identified as the pension transfer specialist in 622 (81 per cent) of the upheld claims.

In 305 cases, the FSCS awarded the claimant the maximum compensation available of £85,000.

This article originally appeared in our sister publication Pensions Age.

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