The Financial Services Compensation Scheme is probing two overseas-based adviser firms which used used EU ‘passporting’ rules to advise UK clients on pension transfers.
Irish firm Wellington Court FS Ltd and Portuguese firm Abana Unipessoal Lda were both ‘passported’ into the UK under the EU Insurance Distribution Directive, allowing them to transact business in the UK.
Wellington Court FS has been judged by the FSCS to have failed while Albana Unipessoal is under investigation at present by the FSCS and has not yet been judged to have failed.
From 19 December 2016, Wellington Court had permission from the FCA to carry out certain regulated activities, including advising on investments and pension transfers. Prior to this date, it only had permission to carry out insurance mediation and insurance distribution activities.
The FSCS has been working with the FCA and the Financial Ombudsman Service to investigate the activities of Wellington Court. Although based in Ireland, Wellington Court had an office in Honiton, Devon.
The FOS has upheld a number of complaints against Wellington Court over its involvement in the transfer of customers’ pensions into SIPPs administered by Guinness Mahon Trust Corporation Ltd (GMTC).
GMTC was declared in default by the FSCS on 29 October 2020.
However, where Wellington Court was involved in a customer’s transfer into the GMTC SIPP, the FSCS has required customers to first exhaust their rights against Wellington Court via the FOS before the FSCS is able to consider any claim against GMTC. As Wellington Court has failed to satisfy the FOS awards the FSCS said it was now considering whether valid claims exist under its rules in connection with Wellington Court’s activities.
Abana was a Portuguese firm that, prior to 31 December 2020, passported into the UK on a services basis. Abana’s passport only covered insurance intermediation in the UK.
The FSCS has determined that Abana undertook regulated activities for customers outside of Abana’s insurance intermediation permissions in the UK. These regulated activities included arranging pension transfers, notably into the Avalon & Westerby SIPP.
The compensation body said FSCS protection may exist for customers where Abana arranged or advised a customer’s pension transfer in the UK, and the claim meets the qualifying conditions for paying compensation under its rules as set by the FCA.
However, the FSCS noted that customer claims after May 2014 may not meet the qualifying conditions for the FSCS to pay compensation. The FSCS will write to those customers whose claims fall into this category.
Currently the FSCS is only open to claims against Abana from customers who transferred their pension into the Avalon SIPP and not the Westerby SIPP as Westerby is still a live entity.
• The FSCS has also declared another firm, investment provider Old Park Capital Limited, as failed this week.
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