This blog is about governance and asks questions about parts of the financial services community that are designed to protect consumers from harm. It involves Public Limited Companies, a Regulator, are two largest trade unions, the BBC and now the National Audit Office. It focusses on Lighthouse Financial Solutions.
Lighthouse Financial Solutions is a trading style of Lighthouse Advisory Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Lighthouse Advisory Services Ltd provides financial solutions and advice to UK Clients and is a wholly owned subsidiary of Lighthouse Group Limited. Lighthouse Group Limited was acquired by Quilter Financial Planning Ltd on 12 June 2019 which is part of the FTSE 250 company – Quilter plc
In September of last year, Quilter has set aside an extra £7m to cover unsuitable advice given by firms it has acquired.
The figures are contained in half-year results to June that shed light on how Quilter is handling defined benefit (DB) transfer claims.
In April 2019, Quilter agreed a £46.2m deal to buy Lighthouse, which completed in June the same year.
But it turned out some Lighthouse customers were poorly advised before Quilter’s acquisition of the firm.
In June 2020 the Financial Conduct Authority instructed Quilter to undertake a skilled persons review of the work done by Lighthouse.
A total provision of £35m has been calculated for the potential redress of British Steel cases and other pension transfer cases.
This is subject to the skilled person review, and includes anticipated costs of legal and professional fees associated with the redress activity.
The results saw the provision increased by £7m during 2021, which has been recognised within expenses of the group.
In its 2021 results, reported today, Quilter increased its provision for defined benefit to defined contribution pension transfer advice and said that throughout 2021 it had paid £4m in redress on British Steel Pension Scheme cases and professional fees of £2m.
“The final costs of redress will depend on the final number of cases where advice is found to be unsuitable and where customers have suffered losses and will also depend on the specific calculations for each case,” the group said, adding that market movements can also impact the number.
This includes results on non-British Steel Pension Scheme member advice included in the skilled person’s review. If you want to understand more about Lighthouse’s links to BSPS members and to the unions , read this blog – now 2 years old but relevant.
Quite how Quilter missed the reporting of cases advised by Lighthouse by the BBC and FT (among others) is a mystery. It seems to be paying the issue a lot of attention now.
Quilter anticipates the skilled person review will complete during the first half of 2022 and points out the final costs of redress for cases upheld will depend on various factors.
These are the specific calculations on a case-by-case basis, which will be impacted by the final detailed redress methodology to be finalised between the skilled person and the FCA.
It will also be determined by market movements and other parameters affecting the defined contribution scheme asset.
Final redress costs are therefore exposed to volatility from these movements which may result in final settlement cost varying from the amounts currently provided.
A tarnished business
The results also showed Quilter Financial Planning’s (QFP) focus on adviser productivity has seen 141 restricted advisers depart the business.
Perhaps the lack of productivity was a result of reading article’s like Jim Armitage’s in the Standard.
The FCA recently reviewed a sample of the British Steel transfers to find only a fifth – one in five! – had been suitable.
The rest were done presumably to fill the advisers’ pockets with fees and commissions.
Given that Lighthouse did nearly 300 of these transfers, the fear has to be that we will be seeing more money set aside in the coming months.
Joining Lighthouse and Quilter Financial Planning
Lighthouse still runs a website and is still advertising for people and firms to join them
If you choose to join Quilter Financial Planning we won’t try to shoe-horn you into a predetermined business structure. Whether you are looking for a home for your business, or a role within a firm, we offer you plenty of choice. Whatever markets you operate in, Quilter Financial Planning gives you the flexibility to run your business the way you want to run it.
And why not? Lighthouse is still a partner of Unison who offer members a complimentary financial review with a Lighthouse adviser.
Just what is in it for Unite and Unison is unclear. Just how Quilter failed to spot the reputational and financial risk in buying Lighthouse is unclear.
And it is still unclear what the National Audit Office will make of this in their inquiry into the handling of pension transfers by the FCA.
This blog cannot pre-judge the findings of the NAO inquiry, but it hopes that they will be clear about the roles of the various parties active in South Wales and the North East of England at the time of BSPS’ “Time to Choose”.
