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Interdependence fined £125,000 by FSA

The Financial Services Authority has fined Interdependence £125,000 for serious failings in the supervision of appointed representatives who were advising customers to withdraw cash early from their pensions.

The FSA concluded that the ineffectiveness of the firm&#39s systems and controls led to the risk that several hundred customers may have been mis-sold these contracts.

Interdependence is currently undertaking a past business review of a sample of 65 pension cases to identify whether or not customers may have been disadvantaged between January 1996 and March 2002.

The review is scheduled to be concluded by June 30 2004. A decision will then be made as to whether an extended past business review should be conducted into additional pension sales during this period. If mis-selling is identified then arrangements will be put in place to pay compensation where appropriate.

David Kenmir, retail intermediaries sector leader at the FSA, says: “These findings are particularly serious as they affect the pension assets of vulnerable customers approaching retirement. Firms must ensure that their recommendations to clients are suitable and they should build this principle into their monitoring of advisers. We will continue to keep a close eye on how appointed representatives are monitored.”

In 1996 the firm set up a pre-approval system to monitor cases where customers were releasing cash from their pensions. It was intended that pensions specialists from the firm would review all aspects of each proposed transaction to make sure that the sale was suitable for the customer. But the FSA says this system did not work properly or effectively.

For example, although appointed representatives were required to send all of their pension fund withdrawal cases to the firm for pre-approval, there was no process for ensuring that appointed representatives did submit their cases or any way of recording those cases that

were not submitted.

The regulator adds that in 90% of all the cases submitted between March 1999 and March 2002 there is no evidence of transactions which should have been submitted for pre-approval actually being submitted.

Interdependence is now part of Tenet Group, which also owns Lime mortgage and general insurance network. It acquired Interdependence back in 2000.

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