The Financial Conduct Authority (FCA) has taken action against Darren Reynolds and Andrew Deeney of Active Wealth for dishonest pension transfer advice.
Reynolds and Deeney have both been banned from working in financial services as well as having to pay a fine of £2,212,216 and £397,400 respectfully.
The regulator reported that Reynolds dishonestly established, maintained and concealed a business model which incentivised recommending products that produced the highest commission for the adviser rather than the best outcome for the client.
He exploited this so that he could receive £1.01m in prohibited commission payments which were funneled through various companies in connection to Reynolds.
More than 670 customers including 150 British Steel Pension Scheme (BSPS) members were dishonestly advised by Reynolds to put their money into investments that were not suitable for them.
Deeney from Active Wealth also made personal financial gains exceeding £200,000 from giving unsuitable advice so he could receive banned commission payments.
This continued at Fortuna Wealth Management Limited, a firm established by Deeney which purchased Active Wealth’s goodwill and client database.
Deeney repeatedly sought to mislead the FCA about his role in advising customers to invest in high-risk investments while Reynolds recklessly allowed the destruction of evidence relevant to the investigation.
By June 2023, the Financial Services Compensation Scheme (FSCS) had paid over £19.8m 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 the compensation amount would be over £42.3m.
Therese Chambers joint executive 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.”