The FCA has prohibited five directors of financial advice firms from working in financial services and collectively fined them over £1 million, after they caused significant losses to pension customers. The largest individual fine was for over £416,000, levied against Thomas Ward.
The decisions follow an extensive 300-page judgement issued by the Upper Tribunal in which the five directors unsuccessfully challenged the FCA’s decisions.
The Tribunal found Andrew Page, Thomas Ward, Aiden Henderson, Robert Ward and Tristan Freer had failed to act with integrity having either acted dishonestly or recklessly. Each had been directors at failed financial advice firms (Financial Page Ltd, Henderson Carter Associates Limited, and Bank House Investment Management Limited) who provided unsuitable advice to over 2,000 customers causing them to place their pensions in high-risk financial products in self-invested personal pensions in which Hennessy Jones, an unauthorised firm, had a significant financial interest. These customers had been referred to them by Hennessy Jones which was also involved in designing the pension advice process used by these firms.
OVER £50m IN LOSSES
This scheme caused significant losses of over £50 million to over 2,000 consumers who have been compensated now by the Financial Services Compensation Scheme. As well as the negative impact on consumers, this also affected other financial services firms which have to contribute to the costs of the FSCS.
The Tribunal found that all the five individuals allowed their “instincts and values to be overridden” and their judgement to be compromised for personal financial gain. They failed to scrutinise where their customers’ pension funds were being invested. The scale of these shortcomings has led to very large penalties being imposed for directors of small IFA firms.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA said: “No reputable financial adviser should recommend that people put their entire pension savings in high-risk investments. Customers were misled into believing that they would get independent and impartial advice, but their interests were reprehensively betrayed in this case. This case also places firms’ relationships with unauthorised introducers in the spotlight. All firms should pay heed and scrutinise these relationships to ensure standards of integrity, due diligence and fair treatment of customers are uppermost.”
The Upper Tribunal’s judgement can be found here.