"Their motivation was based on self-enrichment. Such people have no place in our industry."
The FCA has banned and fined two advisers for dishonest pension transfer advice which saw them receive over £1.2m in commission payments.
The regulator has fined Darren Reynolds of Active Wealth £2,212,316 and baned him from working in financial services. Andrew Deeney was fined £397,400 and also received a ban
The FCA says Reynolds had a "clear disregard for customers’ interests in favour of his own personal gain". Its investigation found that he dishonestly established, maintained and concealed a business model which incentivised recommending products which produced the highest commission for the adviser rather than the best outcome for the customer, and exploited this to the detriment of Active Wealth’s customers so that he could receive £1.01m in prohibited commission payments.
These payments were funnelled via companies connected to Reynolds and were intentionally designed to disguise their true origins.
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.
The regulator says that Reynolds also "dishonestly misled the FCA and recklessly allowed the destruction of evidence relevant to its investigation".
The FCA has also fined Deeney £397,400 and banned him from working in financial services.
Mr 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. Deeney’s misconduct then continued at Fortuna Wealth Management, a firm he established which purchased Active Wealth’s goodwill and client database, where he repeatedly sought to mislead the FCA about his role in advising customers to invest in high-risk investments.
By June 2023, the Financial Services Compensation Scheme (FSCS) had paid compensation of over £19.8 million to 511 of Active Wealth’s former customers. At least 270 customers suffered losses over the FSCS’s compensation cap of £50,000. Were it not for this cap then the compensation amount would be over £42.3 million.
Reynolds applied for privacy in relation to his Notice, but the Upper Tribunal refused that application on 20th September 2023. Deeney settled his case with the FCA in May 2022.
Reynolds has referred his Decision Notice to the Upper Tribunal where he will present his case. Any findings in his Decision Notice are therefore provisional and reflect the FCA’s view as to what occurred and how it considers his behaviour should be characterised.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: "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."