The Financial Conduct Authority (FCA) has censured Lighthouse Advisory Services (Lighthouse) for "serious failings" in relation to transfers out of the British Steel Pension Scheme (BSPS).

The regulator said its rebuke came after Lighthouse gave unsuitable advice between 1 April 2015 to 30 April 2019 to people looking to transfer out of the final salary scheme. It said Lighthouse advised 1,567 customers, 262 of whom were members of the BSPS.

Quilter Financial Planning (Quilter) bought the advisory business in June 2019 for just over £42m - after the unsuitable advice was given.

The FCA said Quilter had taken responsibility for the unsuitable advice and proactively carried out a redress exercise with money paid out totalling more than £23m.

The regulator said this was "far in excess of the fees Lighthouse received for the unsuitable advice".

What happened

The FCA explained that Lighthouse had two advisers partially based on-site at the Scunthorpe British Steel works. It explained many of those Lighthouse advised "were relying on their BSPS pension as their main source of retirement income. Many were in a vulnerable position due to uncertainty around the scheme".

It went on: "Lighthouse's advisers did not challenge BSPS members' reasons for transferring or properly consider alternatives to meet their retirement objectives. In some cases, they failed to provide evidence as to why a transfer would be in members' best interests."

It found that 53% of advice provided to BSPS members from April 2015 to April 2019 was unsuitable, this was higher than industry average unsuitable BSPS advice levels of 46%.

Elsewhere, similar advice process failings were revealed for other, non-BSPS customers, with 28% of that advice found to be unsuitable.

FCA executive director of enforcement and market oversight Therese Chambers (pictured) said: "Many consumers were wrongly advised by Lighthouse to transfer out of their valuable guaranteed pensions.

"Given the vulnerable position of consumers transferring out the British Steel Pension Scheme, the firm should have taken real care in providing advice - it failed to do so."

She added: "Quilter deserves full credit for taking responsibility for unsuitable advice given before they bought Lighthouse and for the proactive way in which they've worked with the FCA to put it right."

The watchdog added that new parent company Quilter provided "very high levels of cooperation" during the investigation. That, alongside its proactive redress exercise, resulted in the censure, not a fine, it said.

It added that since Quilter acquired Lighthouse, it had replaced Lighthouse's senior management team and its internal processes in relation to defined benefit transfer advice.

Quilter chief executive Steven Levin said: "Although the relevant advice pre-dated our acquisition of Lighthouse, we have fulfilled our commitment to ensuring that Lighthouse has responded to this situation in a way that is consistent with our values.

"We are pleased that the FCA recognised our co-operation with its investigation and that we have proactively and promptly paid redress to affected customers."