The Upper Tribunal, a court of appeal, has confirmed an FCA decision to ban a "corrupt" and "dishonest" financial adviser and fine him £2m for misconduct over hundreds of British Steel Pension Scheme (BSPS) pension transfers which resulted in over £17m in compensation being paid to victims.
The conduct of the adviser, Darren Antony Reynolds (FCA Ref: DAR00040 ), was described as the worst of the BSPS pension transfer cases the FCA has investigated.
Thousands of BSPS members were encouraged to transfer out of the scheme by unscrupulous financial advisers. Many lost huge sums due to the transfers.
Mr Reynolds has now been banned by the FCA from working in financial services and fined a total of £2,037,892.
According to the FCA decision notice, Mr Reynolds was an approved person at Active Wealth, a small financial advice firm in the West Midlands which went into liquidation on 5 February 2018 and which has since been dissolved.
Mr Reynolds dishonestly advised Active Wealth’s customers to invest in an investment portfolio created by Greyfriars Asset Management LLP consisting of mini-bonds, knowing that it was not suitable for them.
The FCA said Mr Reynolds was dishonest when he gave pension transfer advice and investment recommendations to his customers, causing them “significant harm.”
The watchdog said that Mr Reynolds showed a “clear disregard” for his customers’ interests.
He encouraged British Steel Pension Scheme members to transfer out of their defined benefit pension scheme, despite knowing that the advice was wholly unsuitable. He also advised his customers to invest in high-risk and unsuitable products while at the same time hiding high exit fees and forging documents.
Mr Reynolds’ misconduct exposed hundreds of people to serious financial loss. The FCA said that over £17.6m has been paid in compensation to more than 470 affected customers, many of whom suffered losses in excess of statutory compensation limits.
In addition, Mr Reynolds let two unapproved people give pension advice, putting customers at risk. When confronted with his misconduct he lied to regulators, allowed "important evidence" to be destroyed, and moved his family home into a trust to avoid paying his debts, the regulator said.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Mr Reynolds’ misconduct was the worst we saw out of all the British Steel Pension Scheme cases, and he caused untold damage to his clients. He acted in a way that was corrupt and dishonest, putting his own profits before people’s pensions and acting without integrity as he tried to cover his tracks.
“He has spent many years trying to evade responsibility for his actions. The Tribunal’s full endorsement of our findings now brings those efforts to avoid accountability to an end. We will pursue recovery of the penalty to the fullest possible extent and will not hesitate to bankrupt him if necessary. We will ensure that he does not retain a single penny of his corrupt profits."
The Tribunal noted that: ”’Mr Reynolds is clearly guilty of dreadful misconduct over a protracted period, which had very serious adverse impacts on a large number of retail customers. He is, as the Authority alleged, a corrupt and dishonest man lacking integrity.”
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