The unregulated introducer at the core of the British Steel Pension Scheme saga, Celtic Wealth Management, has been accused of giving financial advice to steelworkers – a practice that is illegal.
Professional Adviser has spoken with numerous steelworkers who dealt with Celtic Wealth Management, a firm that worked closely with now-liquidated advice firm, Active Wealth UK.
One steelworker told PA a senior financial consultant at Celtic Wealth Management, told him his pension fund would be enough to pay out £20,000 per year, plus the 25% tax allowance when he retired.
The steelworker in question was told it was a “no-brainer” to transfer, and that the consultant had asked whether he had a mortgage, what savings he had in the bank, about his dependents, his pay and his pension figure.
When Professional Adviser asked if he felt Celtic Wealth had, at any point, given him financial advice, he said: “Yes I do, they were leading you that way. [The consultant] actually told me that with the size of my pension pot, by the time I wanted to retire at 57/58, that pot would be worth well over half a million pounds, and would give in me in the region of a £125,000 tax free lump sum if I wanted to take it, and a pension of £20,000 a year, comfortably.”
Another said: “[The consultant] had a pad there and he was working out things, the rent of my properties, and he said ‘look what you’d have at the end of the year.’ Is that showing me what I’d have at the end of the year or is that advising me? I just don’t know.”
A third added: “He did the legwork, he said ‘we used this financial adviser up in the Midlands, he just gets your pot out, and that’s it.’
“I met Darren [Reynolds, an adviser at Active Wealth UK] twice for about 20 minutes each.”
A fourth had spoken with Clive Howells, the founder of Celtic Wealth Management. “I spoke with Clive Howells and he came out to me. [He] had my latest forecasts, he had a look at it, and within five minutes he told me exactly what I was going to have per month, and how I needed to act with some urgency on getting out of there before they [the pension scheme] shut the gate.
“He did say that he doesn’t deal with the nitty-gritty. I didn’t really realise how it all worked – I thought he was the financial adviser because he was telling me all the figures, so I thought he’s the director of Celtic Wealth, why am I dealing with this other firm [Active Wealth]?
“The bottom line he kept on saying, was that I was going to be pulling £15,000 to £20,000 a year on that money in interest alone.”
‘Very clearly financial advice’
After speaking with the steelworkers, Professional Adviser contacted Royal London director of policy, Steve Webb, and former FCA technical specialist-turned consultant, Rory Percival, to get their take on the exchanges.
Webb said while he didn’t hear the conversations himself, phrases like “no-brainer” with regard to whether or not to transfer are “very clearly financial advice”.
“If the steelworkers were told that the introducers were doing all the work, and the IFA was simply there to ‘get the money out’ then this does not fit the way things are supposed to work; the IFA is meant to do the work,” he said.
“It is hard to see how a relationship where the unregulated person does the ‘leg work’ and the recommendations are then simply signed off by an adviser would meet the FCA requirements.”
Webb said members of the public do not know the difference between advice and guidance, which makes it all the more important that those who provide advice and guidance understand what the boundaries are and stick to them.
“These boundary lines seem to have become very blurred in the British Steel case, and it is very hard to see how telling someone that a transfer is a ‘no-brainer’ can have done anything other than provide advice,” he added.
‘Criminal offence’
Percival said a ‘personal recommendation’, which he said is normally what people mean when they say “advice”, is more precise than advising on investments, as “it’s a step beyond as it involves presenting the solution as suitable to the individual”.
In this case, he said that the first steelworker, who had been told it was a “no-brainer”, sounded like they had been given a personal recommendation, particularly as it follows that the steelworker was asked about his mortgage, savings, dependents, pay, and his pension.
Percival added: “It is a criminal offence for someone who is not authorised to engage in a regulated activity.”
Professional Adviser was unable to contact Celtic Wealth Management for comment.
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