pounds 140,000 fine faces M&E in pensions mis-selling blitz

The Personal Investment Authority, the financial services regulator, is poised to confirm its hardening stance against pensions mis-selling by levying a pounds 140,000 fine against M&E Network, a large group of independent financial advisers.

Details of the fine against M&E, which is in the final stages of being formalised, comes days after The Independent revealed that another network, DBS Financial Management, was about to face a record pounds 500,000 penalty.

Simon Hudson, chairman of M&E, yesterday declined to comment on the impending fine against his own network. However, he said: "We have had no problem with training and competence or compliance visits by the PIA.

"Like everyone else, we have been through the mangle from the PIA's pensions review team. We are as vulnerable to that as anyone."

He added that he would be calling for an inquiry by the PIA into how decisions on fines were allegedly being made before the disciplinary bodies that were supposed to agree them had even met.

A PIA spokeswoman refused to comment on any aspect of the regulator's disciplinary strategy.

The latest fine, the second-largest to date, will be the third against networks of independent advisers. A few weeks ago, the PIA fined Berkeley, another firm, pounds 50,000 over the same issue. The fines are certain to raise questions about whether large networks can deliver effective controls on their members.

Networks, which have grown substantially since the PIA was formed in 1994, are supposed to offer the safety of centralised compliance controls in return for some commission income.

Yet last week, DBS Financial Management, chaired by Ken Davy who is also a leading figure within the financial services industry and sits on the PIA board, was revealed to be in the regulator's sights. DBS, which has 1,700 member firms with 2,500 individual advisers, is the largest network of advisers in the UK.

M&E, formed in November 1987, is the second-largest, with about 330 firms employing 650 advisers. Average commission income is pounds 73,000 per member, with the network as a whole taking more than pounds 22.5m in commission income last year. The firm's members have more than 70,000 clients among them.

A recent survey on behalf of Money Marketing, a financial magazine, showed that M&E has the highest proportion of former "tied agents" and the smallest number of IFAs as members.

Tied agents are ex-salespeople who were allowed to sell the products of only a single company. By contrast, IFAs can advise on any product.

Industry observers were surprised yesterday by the looming fine against M&E. Unlike other networks, it does not allow members to place business directly with a product provider.

All proposals have to be referred to the company's head office in Leeds, where they are checked and only then referred to the relevant financial provider. This should ensure far tighter controls over the firm's members, something that M&E had previously claimed as a particular strength.

One member of a rival network, who would not be named, queried whether M&E's controls were as strict at head office level as had been claimed.

But Mr Hudson said: "This would have nothing to do with our compliance systems." More firms were facing problems less with the extent of any pensions mis-selling than with the speed at which it was being cleared up.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...