Lighthouse letter to client admits DB advice ‘technical error’

Hannah Godfrey reports...

Lighthouse Group admitted to making a “minor technical error” in its advice given to British Steel workers to transfer their defined benefit (DB) pensions.

RP’s sister title Professional Adviser has seen correspondence from a Lighthouse adviser to a steelworker in which the adviser admitted to making a “minor technical error” while advising the steelworker to transfer out of their DB pension.

The letter, which was sent in January 2018, explained: “We have reviewed your file in light of the recent publicity in respect of [DB transfers]. We have noted that the suitability report sent to you by [a Lighthouse adviser] at that time contained a minor technical error in respect of the early retirement arrangements potentially available to members of a pension scheme that has been placed into the Pension Protection Fund (PPF).

“The letter you received stated that if the British Steel Pension Scheme went into the PPF, it would not be possible for you to retire earlier than the normal scheme retirement date. This was an error because there are now facilities in the PPF rules that would allow members to retire early, but only with the express permission of the employer and scheme trustees. There is, however, no guaranteed that permission would be given.”

Though the adviser who made the error put it down to rule changes at the PPF, Professional Adviser understands there have been no such changes at the lifeboat fund.

A PPF spokesperson confirmed to PA no rule changes had taken place and the PPF had always allowed early retirement from the age of 55. The fund also honours scheme members who have a protected pension early retirement date as part of their benefits and are able to retire even earlier.

Liability with Quilter

Lighthouse was acquired by life and advice giant Quilter last June, adding 400 advisers to Quilter and its advice arm Intrinsic Financial Services. The move extended the total number of advisers at the business to more than 3,900.

The letter conceding the mistake has come to light nearly two years after it was first sent, and several months after Professional Adviser first revealed Quilter could see complaints made against it from British Steel workers following an affinity partnership between the steelworkers’ union and Lighthouse.

Thanks to the affinity partnership, advisers at Lighthouse provided educational seminars to steelworkers looking for advice or guidance. The partnership also meant four Lighthouse advisers were based at British Steel plants – two at Scunthorpe and two at Teesside. PA understands complaints have been submitted against Lighthouse that are now with Quilter.

In an exclusive interview with Professional Adviser Lighthouse last October, adviser Jeanette McHardy, who worked at both the Scunthorpe and Teesside British Steel sites, spoke of her confidence of the advice given to the workers, with the firm having already had their files looked at by the Financial Conduct Authority. She said the regulator was “very happy” with the files.

Echelon Wealthcare managing director Alastair Rush, who has been instrumental in helping the steelworkers with claims against various advice firms, said steelworkers took information like the letter at face value and did not question its contents. Rush said an independent review of all advice given to steelworkers “must be carried out”.

Rush, along with Clarke Wilmott solicitor Philippa Hann and British Steel Pension Scheme member Bob Welch, are due to meet with MPs next Tuesday at Westminster to discuss latest developments.

“This is a cohort of nearly 9,000 men and women who continue to be overlook and disadvantaged,” Rush added. “Holly Mumby-Croft MP, newly elected in Scunthorpe, has a family history steeped in the art of steel making and this injustice resonates with her.”

Quilter declined to comment on the letter, though a spokesperson confirmed Quilter would be liable to any claims made against Lighthouse advisers.