The Financial Service Compensation Scheme (FSCS) said it is preparing to declare Active Wealth in default and is “working closely with the Financial Conduct Authority (FCA) to understand the firm’s position”.
Customer claims
The FSCS is the UK’s statutory compensation scheme that protects customers of regulated financial services firms.
“A declaration of default means FSCS is satisfied a firm is unable to pay claims for compensation made against it,” a spokesperson said.
“This paves the way for customers of that firm to make a claim to FSCS,” they said.
Mark Neale, FSCS’s chief executive, said: “We are working as quickly as possible to provide some certainty for customers.
“We are preparing to start considering claims as soon as we receive them and will provide further updates on our website as more information becomes available.”
Customers who believe they may have a claim can submit an application using FSCS’s online claims service.
Active Wealth
According to a public record notice on The Gazette, Active Wealth entered creditors’ voluntary liquidation on 5 February.
The firm had its permissions to accept new pension business suspended in November 2017, after the FCA identified the firm as providing “questionable advice” to BSPS members.
It was the first of several IFA firms to cease giving advice, some voluntarily and others through FCA intervention, after concerns were raised that the BSPS scheme was a “honeypot for scammers”.
Damning report
On 15 February, the Work and Pensions Committee released a damning report that blasted the actions of some financial advisers, including Active Wealth.
One firm that introduced pension scheme members to Active Wealth offered “sausage and chips” meals in meetings heavily geared towards pushing transfers on them, the committee report stated.
The report says IFAs acted as “vultures” and were seen “hanging around” outside BSPS roadshows waiting for vulnerable members.
The report further exposes this questionable advice saying many members received advice that was “unsuitable for anyone, apart from very, very experienced retail clients”.
Montfort International’s head of financial planning Eugen Neagu, who gave evidence for the report, described the explanations accompanying the investment recommendations as “bamboozling at best, taking into consideration that the report was addressed to steelworkers with low investment experiences”.
