FCA fines adviser over £2m for 'dishonest' BSPS transfer advice

The Financial Conduct Agency (FCA) has fined former Active Wealth company director, Darren Reynolds, £2,212,316 for dishonest pension transfer advice, and banned him from working in financial services.

The FCA said that Reynolds "dishonestly" advised more than 670 customers, including 150 British Steel Pension Scheme (BSPS) members who had no option but to make a decision about their pension, to put their money into investments that he knew were not suitable for them.

In particular, the FCA’s review found that Reynolds had a “clear disregard for customers’ interests in favour of his own personal gain”, and had dishonestly established, maintained and concealed a business model that incentivised recommending products that produced the highest commission for the adviser rather than the best outcome for the customer.

Reynolds exploited this to the detriment of Active Wealth’s customer, according to the FCA, in turn receiving £1.01m in prohibited commission payments, which were funnelled via companies connected to Reynolds and "intentionally designed to disguise their true origins".

The watchdog said that Reynolds also dishonestly misled the FCA and "recklessly" allowed the destruction of evidence relevant to its investigation. Reynolds has referred the case to the Upper Tribunal where he will present his case.

Reynolds was not the only former adviser to come under scrutiny however, as the FCA also fined former Active Wealth adviser, Andrew Deeney, £397,400 and banned him from working in financial services. Deeney settled his case with the FCA in May 2022.

The FCA's investigation found that Deeney made personal financial gains exceeding £200,000 by providing Active Wealth customers with unsuitable advice so that he could dishonestly receive banned commission payments.

According to the FCA, this misconduct continued at Fortuna Wealth Management Limited (Fortuna), a firm he established, which purchased Active Wealth’s goodwill and client database, where he allegedly sought to mislead the FCA about his role in advising customers to invest in high-risk investments.

The Financial Services Compensation Scheme (FSCS) has since paid compensation of over £19.8m to 511 of Active Wealth’s former customers as of June 2023, with at least 270 customers suffering losses above the FSCS’s compensation cap of £50,000.

Had this cap not been in place, FCA estimated that compensation could have reached over £42.3m.

FCA joint executive director of enforcement and market oversight, Therese Chambers, commented: “This is one of the worst cases we have seen. Mr Reynolds, who allowed evidence to be destroyed and who has consistently sought to evade accountability, and Mr Deeney, lied and lied again.

“First, to dupe people into leaving safe pension schemes and placing money meant for their retirement in unsuitable, high-risk investments. Then to try and hide their misconduct from us. Their motivation was based on self-enrichment. Such people have no place in our industry."

Reynolds previously applied for privacy in relation to the decision notice on his case, but the Upper Tribunal refused the application in September 2023.

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