The FCA found that Mr Hussein advised customers to switch their existing pensions when this was often unnecessary and not in their best interest.
Between 2015 and 2017, Mr Hussein and his firm advised 620 customers to switch their pension into a self-invested personal pension (SIPP) containing significant investments in ‘Portfolio 6’ (P6), an investment offered by the Discretionary Fund Management firm, Greyfriars Asset Management LLP (Greyfriars). His misconduct put at risk an estimated £13.5m of CWL customers’ retirement savings.
P6 was a high-risk investment comprised of unregulated mini-bonds relating 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 mini bond investments in P6 subsequently failed and P6 was closed to new investment in 2016. Greyfriars went into in administration in 2018.
Mr Hussein disregarded clear statements and risk warnings about P6 contained in Greyfriars promotional material, claimed that customers investing in P6 were ‘experienced investors’ when there was no reasonable basis for doing so, and he charged fees to customers for an on-going advice service which the firm did not provide.
The failings by Mr Hussein were particularly serious because of the FCA’s findings that he acted recklessly and abused a position of trust when advising clients who were often financially inexperienced, vulnerable and had no or limited capacity for loss. They were also serious because, by his own admission, he was aware of the FCA’s pension alerts, published prior to CWL being established. These alerts reminded financial advisers that when advising customers to switch to a SIPP, they must assess the suitability of the underlying investments to be held in the SIPP, and warned that non-mainstream investments were unlikely to be suitable options for the vast majority of retail customers.
Executive Director for Enforcement and Market Oversight, Mark Steward, said: ‘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.’
CWL has ceased trading and is now in liquidation. The Financial Services Compensation Scheme (FSCS) is investigating claims made by CWL’s customers and, to date, has paid compensation to 437 of CWL’s customers. Consumers that are concerned they may be affected should contact the FSCS.
Omar Hussein agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount, the fine would have been £165,797.38.
Notes to editors
- Final Notice 2021: Omar Hussein
- The FCA’s enforcement information guide
- The FCA’s approach to settlement and mediation in enforcement cases