The UK's Financial Conduct Authority has fined David Watters £75,000 for failing to exercise due skill, care and diligence in his role as compliance oversight officer, firstly at FGS McClure Watters (FGS) and then Lanyon Astor Buller Ltd (LAB).

As the result of an investigation, the FCA found that Watters failed to take reasonable steps to ensure that the process in place at FGS and LAB, for giving advice about enhanced transfer value (ETV) pension transfer exercises, was adequate and met regulatory standards.  This led to a serious risk of unsuitable advice being given to customers of FGS and LAB about the merits of transferring their pensions from 'defined benefit' to 'defined contribution.'  

Approximately 500 customers who received advice from FGS or LAB transferred their pensions from a DB scheme to a DC scheme, with a combined value of approximately £12.7 million. In many cases, it may have been unnecessary for customers to leave their DB schemes, thereby losing their guaranteed benefits.

Watters failed to give sufficient consideration to whether the advice process was compliant; he did not take reasonable steps to gain a sufficient understanding of the relevant regulatory requirements; and did not obtain an appropriate third party review of the processes to ensure compliance. He also failed to take reasonable steps to ensure that advisers did not give customers unsuitable ETV pension transfer advice.

ETV exercises incentivise customers to transfer their pensions.