Adviser fined £116k by FCA for 'reckless and unsuitable' pension advice

The FCA found that Omar Hussein, former director and senior financial adviser of pension switching firm Consumer Wealth Ltd, advised customers to switch their existing pensions when this was often unnecessary and not in their best interest.

Between 2015 and 2017, Mr Hussein and his firm advised 620 customers to switch their pension into a self-invested personal pension (SIPP) invested in a high-risk portfolio offered by Greyfriars. His misconduct put at risk an estimated £13.5m of CWL customers’ retirement savings.

The portfolio ('P6') was a high-risk investment comprised of unregulated mini-bonds relating to overseas investments in car parks, renewable energy and holiday resorts, which the FCA said were illiquid in nature and 'highly likely to be unsuitable' for the low net worth, financially inexperienced investors who were the firm’s target market. Several of the underlying mini bond investments in P6 subsequently failed and P6 was closed to new investment in 2016. 

Mr Hussein disregarded clear statements and risk warnings about the portfolio contained in Greyfriars promotional material, claimed that customers investing in P6 were ‘experienced investors’ when there was no reasonable basis for doing so, and he charged fees to customers for an on-going advice service which the firm did not provide. 

The regulator said Hussein's failings were particularly serious because of the FCA’s findings that he acted recklessly and abused a position of trust when advising clients who were often financially inexperienced, vulnerable and had no or limited capacity for loss, and because he has admitted he was aware ofn the FCA's pension alerts warning advisers to assess the suitability of the underlying investments of SIPPS when advising a pension switch. 

Hussein's former firm, CWL, has now ceased trading and is in liquidation. The Financial Services Compensation Scheme is working with its former customers and paying compensation where required.

Executive Director for Enforcement and Market Oversight, Mark Steward, said: 

"Consumers work hard over many years to save for their retirement and unsuitable pensions advice can significantly impact their quality of life in retirement – or their ability to retire at all. Mr Hussein acted recklessly and abused the trust of his clients by taking unjustifiable risks with their retirement savings. He has proven himself unfit to work in the financial services industry."