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£116,000 fine and ban for ‘reckless’ pension switching advice

Nearly 50% of client’s retirement pots invested in a high-risk strategy

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Omar Hussein, the director and senior financial adviser at Consumer Wealth Ltd (CWL), has been banned from working in financial services by the Financial Conduct Authority.

Between 2015 and 2017, he and his firm advised 620 customers to switch their pension into a self-invested personal pension (Sipp) that contained high risk investments.

According to the FCA, his misconduct put at risk an estimated £13.5m ($18.6m, €16m) of customers’ retirement savings.

Hussein was fined just under £116,000 after qualifying for a 30% discount after agreeing to settle at an early stage. It would otherwise have been £165,797.38.

CWL entered voluntary liquidation in December 2018. To date, the Financial Services Compensation Scheme (FSCS) has paid more than £4.3m in compensation to 437 customers.

A further 171 claims are being assessed.

Risky business

The Sipp product recommended by Hussein and CWL contained significant investments in ‘Portfolio 6’ (P6), which was offered by defunct discretionary fund manager Greyfriars Asset Management.

The FCA describes P6 as “a high-risk investment comprised of unregulated mini-bonds to overseas investments in car parks, renewable energy and holiday resorts”.

“These investments 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 investments subsequently failed and P6 was closed to new investment in 2016.

The FCA said that Hussein “disregarded clear statements and risk warnings about P6 contained in Greyfriars promotional material”.

He also claimed that his clients were experienced investors and charged fees for an on-going advice service that CWL did not provide.

Abuse of trust

The FCA said Hussein’s failing were “particularly serious” given that he “acted recklessly and abused a position of trust”.

He prepared unclear and misleading suitability reports recommending customers switch pensions.

Additionally, he recommended they invest significant portions of their Sipp – typically 49% – in P6. This was in contrast with clear guidance from Greyfriars that it was only suitable for a small proportion of an investor’s funds.

Hussein maintains that his advice in relation to P6 was suitable, the watchdog added.

“His reckless lack of integrity and continued lack of insight into his misconduct mean that Mr Hussein poses a serious on-going risk to consumers,” the FCA stated.

Mark Steward, executive director for enforcement and market oversight at the watchdog, commented: “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.”

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