The Financial Conduct Authority (FCA) has fined Inspirational Financial Management (IFM), which is in administration, £897,840, after it found that the firm poorly advised members to transfer out of defined benefit (DB) pension schemes, including the British Steel Pension Scheme (BSPS).

The FCA also banned IFM adviser, Arthur Cobill, and IFM director, William Hofstetter, from advising customers on pension transfers and pension opt outs. Hofstetter was also banned from holding any senior management function at any regulated firm.

In addition to this, Cobill and Hofstetter agreed to pay £120,000 and £40,000, respectively, to the Financial Services Compensation Scheme (FSCS) to contribute to compensation for IFM’s customers.

The FCA found that, between 8 June 2015 and 22 December 2017, IFM provided "unsuitable" pension transfer advice and failed to properly consider whether it would be in customers’ best interests to transfer out of their secure DB pensions.

In particular, the FCA said that while the contingent charging model used by the firm benefited IFM, Hofstetter and Cobill, it risked the long-term financial health and interests of their customers.

Indeed, a review by the watchdog revealed that 83% of IFM’s pension transfer advice failed to comply with its minimum required standards, and customers risked financial loss as a result of the poor advice they received.

According to the FCA, out of 307 IFM customers advised to transfer out of their DB pension scheme, 261 completed the process.

Cobill advised 245 of those, including 198 members of the BSPS. In total, the BSPS members advised by Cobill had pension benefits worth over £90m.

Hofstetter, meanwhile, was responsible for the compliance oversight of IFM’s process for pension transfer advice.

Commenting, FCA joint executive director of enforcement and market oversight, Therese Chambers, stated: “Pensions are the safety net people spend their lives building. For many customers, their DB pension was their most valuable asset, and it was their only retirement provision other than their state pension.

“As experienced advisers, Mr Cobill and Mr Hofstetter, and IFM should have known better than to unravel this.

“It is only right that Mr Cobill and Mr Hofstetter contribute towards compensating those affected.”

The Financial Services Compensation Scheme (FSCS) also recently confirmed that it had placed IFM under investigation and was considering claims against the company, given that the firm will not be able to continue to take part in the redress scheme for BSPS members, as it has gone out of business, with those affected instead able to make a claim directly with the FSCS.

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