FCA Bans, Fines Directors over £1 Million for Bad Pension Advice

The UK’s Financial Conduct Authority (FCA) has banned five directors from three firms and fined them more than £1 million ($1.3 million) for “acting without integrity” regarding pension advice, and for misleading the regulator.

The FCA said that the directors’ “reckless behavior” prompted more than 2,000 customers to invest approximately £76 million ($98.5 million) of their pension assets into products that invested in risky illiquid assets.

The regulator fined Thomas Ward and Andrew Page of Financial Page Ltd. £416,558 and £321,033, respectively, and fined Aiden Henderson, a director at Henderson Carter Associates Limited, £179,179. It also fined Robert Ward and Tristan Freer, directors at Bank House Investment Management Limited, £88,100 and £52,725, respectively.

“The directors should have known that the products were unlikely to be suitable for retail customers, except in very limited circumstances, but acted recklessly in closing their minds to the obvious risks,” the FCA said regarding all of the directors except Ward. “They were all approved persons in a controlled function at their firms and so should have known that by using the pension review and advice process they were acting recklessly.”

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As for Ward, he was not approved by the FCA, and was considered a de facto director.

“Ward disregarded the interests of FPL’s customers and showed a willingness to enrich himself at their expense,” said the FCA. “Ward also took deliberate steps to control and influence the information that FPL disclosed to the FCA and encouraged Mr. Page to withhold important information and deliberately drafted communications that were false and/or misleading.”

The five directors have referred the decision notices issued against them to the Upper Tribunal where they will present their respective cases. The FCA said that any findings in the decision notices are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers their behavior should be characterized. The Upper Tribunal will determine the appropriate action for the FCA to take, if any, and will remit the matter to the FCA with directions the Upper Tribunal considers appropriate.

“HCA, FPL and BHIM held themselves out to customers as providing bespoke independent investment advice,” the FCA said in a release. “But that did not reflect the reality of the service that was provided. In reality customers were recommended pension switches and pension transfers to products that invested in high risk, illiquid assets which were unlikely to be suitable for them.”

As of Jan. 29, the Financial Services Compensation Scheme has paid compensation of £26.8 million to 1,106 customers of FPL, HCA, and BHIM in relation to the matter, and is investigating further claims.

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Tags: Bank House Investment Management Limited, Financial Conduct Authority, Financial Page Ltd., Henderson Carter Associates Limited, Pension

For 10 years, CIO has honored the accomplishments of you, the chief investment officers, with our Industry Innovation Awards.

On Thursday, December 12, at the New York Public Library, CIO will once again bring together institutional investors and those who provide for them.

It’s time to nominate deserving asset owners and asset managers/servicers for this year’s awards.

Since we started these awards in 2010, “innovation” has perhaps become an overused buzzword. While others may confuse innovation with change, we do not: Our goal is to highlight the truly innovative approaches to asset management and asset owning, separating the merely different from the meaningful.

For example, our 2018/2019 Innovation winner of the Defined Contribution Plan category, Bob Hunkeler (CIO of International Paper), became an early adopter of brokerage windows and led his company to become one of the first plans in the country to have a fully unbundled plan with independently awarded investment management, recordkeeping, and custody assignments. Despite the rising tide of indexation, Hunkeler is a firm believer in active management in both the pension and savings plan, which he claims has added hundreds of millions of dollars of value to the plans over the years. Now, the plan offers a nearly limitless choice of investments with a three-tiered investment lineup of balanced funds, asset class funds, and a brokerage window, a state-of-the art recordkeeping platform at about one-fifth of the cost, a number of participant-friendly plan design features, and a customized communications program.

When nominating, ask yourselves, who has done something that is truly different, and that may have changed the way we think about this business?

What You’ll Need:

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To make a nomination, you’ll be asked whether you’re nominating an asset owner or asset manager, the name and title of the person or entity you’re nominating, their location, email address and to choose which category they fall into.

The asset owner CIO categories fall into plan size and type, as well as special categories for ESG and Collaboration. You can make more than one nomination, and you’ll do this by indicating if you’re done or ready to nominate another. Please feel free to make as many nominations as you’d like.

THE DEADLINE TO SUBMIT YOUR NOMINATIONS IS AUGUST 3.

Details:
a) Finalists for both asset owners and asset managers/servicers will be announced in early September.

b) The finalists and winners will be chosen by the CIOeditorial team in conjunction with an Advisory Board of former and current CIOs. Some categories (such as investment outsourcing, transition management, and corporate investment strategies) will be judged largely on data collected via the CIOsurvey system.
c) The overall “CIO of the Year” award—given last year to Chris Ailman, chief investment officer of the California State Teachers’ Retirement System—will be announced at the dinner, and will be drawn from the winners of the asset owner categories.
d) The Lifetime Achievement award, which Mansco Perry, executive director and CIO of the Minnesota State Board of Investment, won last year, will be presented at the dinner.

Our Next Generation Award is chosen the evening of the awards dinner, following a hotseat panel and audience poll at the CIO Influential Investors’ Forum.

To nominate, please follow the survey directions here.

Below is a list of CIO’s past Industry Innovation Award winners in their respective categories:

Foundation

Helmsley Charitable Trust / Rosalind Hewsenian (2018)

Carnegie Corp. / Kim Lew (2017)

University of Arizona Foundation, Craig Barker (2016)

Wisconsin Alumni Research Foundation, Carrie Thome (2015)

Margaret A. Cargill Philanthropies, Shawn Wischmeier (2014)

The Kresge Foundation, Robert Manilla (2013)

Conrad N. Hilton Foundation (2012)

Endowment

Hamilton College, Anne Dinneen (2018)

Church of England, Tom Joy (2017)

Texas Teachers University, Tim Barrett (2016)

UCal, Jagdeep Bachher (2015)

University of Chicago, Mark Schmidt (2014)

UTIMCO, Bruce Zimmerman (2013)

University of Notre Dame (2012)

Corp Defined Benefit Under $5bn (2014: under $10bn)

Eli Lilly, Susan Ridlen (2018)

Computer Sciences Corp., Brian Reed (2017)

Blue Cross, Blue Shield, Jamey Sharpe (2016)

Textron, Charles Van Vleet (2015)

DTE Energy, Paul Cavazos (2014)

General Mills, Marie Pillai (2013)

Xerox (2012)

Corporate Defined Benefit Over $5bn (2014: over $10bn)

IBM, Harshal Chaudhari (2018)

ABB, Elizabeth Bourqui (2017)

International Paper, Robert Hunkeler (2016)

Alcoa, Ron Barin (2015)

BP America, Greg Williamson (2014)

UPS, Brian Pellegrino (2013)

United Technologies (2012)

Public Defined Benefit Under $15bn

Wyoming Retirement System, Sam Masoudi (2018)

South Dakota, Matthew Clark (2017)

MoDOT, Larry Krummen (2016)

OCERS, Girard Miller (2015)

Sacramento ERS, Scott Chan (2014)

San Bernardino County Employees’ Retirement Association (2013)

Public Defined Benefit Between $15bn-100bn

LACERA, Jonathan Grabel (2018)

Hawaii ERS, Vijoy Chattergy (2017)

Pa PSERS, Jim Grossman (2016)

Mass PRIM, Michael Trotsky (2015)

TRS Illinois, Stan Rupnik (2014)

Employees’ Retirement System of Texas, Tom Tull (2013)

Canada Pension Plan Investment Board (2012)

Public Defined Benefit Over $100bn

CalSTRS, Chris Ailman (2018)

NYC Retirement, Scott Evans (2017)

SWIB, David Villa (2016)

CalPERS, Ted Eliopoulos (2015)

OTPP, Neil Petroff (2014)

CalSTRS, Christopher Ailman (2013)

Sovereign Wealth Fund

Texas Treasury Safekeeping Trust Co., Paul Ballard (2018)

Australia Future Fund, Raphael Arndt (2017)

APFC, Jay Willoughby (former) & Jim Parise (interim) (2015)

NMSIC, Robert Vince Smith (2014

GIC Singapore, Lim Chow Kiat (2013)

New Zealand Superannuation Fund (2012)

Healthcare

Mercy Health, St. Louis, Anthony Waskiewicz (2018)

Hartford HealthCare, David Holmgren (2017)

Intermountain Healthcare, Jacque Millard (2016)

Baylor Scott and White, Mark Amiri (2015)

Ohio Health, Al Nelson (2014)

The UAW Retiree Medical Benefits Trust, Ken Frier (2013)

Ascension Health Alliance (2012)

Defined Contribution

International Paper, Bob Hunkeler (2018)

Fiat Chrysler, Bob Watson (2017)

American Airlines, Kevin Menezes (2016)

Exelon, Doug Brown (2015)

CenturyLink Investment Management, Kathleen Lutito (2014)

United Technologies Corp. (UTC), Robin Diamonte (2013)

Next Generation

Chad Mhyre, Missouri (2018)

Carlos Rangel, Kellogg (2017)

Greg Spick, UPS (2016)

Randy Kim, Conrad Hilton Foundation (2014)

Consulting

Allan Martin, NEPC (2018)

Rich Nuzum, Mercer (2017)

Jim Vos, Aksia (2016)

Eugene Podkaminer, Callan Associates (2014)

Lifetime Achievement

Mansco Perry III, Minnesota State Board of Investment (2018)

Ashbel Williams, Florida SBA (2017)

Mark Schmid, University of Chicago Endowment (2016)

Scott Malpass, University of Notre Dame (2014)

Britt Harris, Teacher Retirement System of Texas (2013)

ESG

Dan Chu (Sierra Club) (2018)

Jagdeep Bachher, UCal (2017)

Collaboration

David Holmgren, Hartford HealthCare (2018)

Tags: Asset Managers, Asset Owners, CIO, Endowments, Foundations, Innovation Awards 2019, NextGen, Pension