The latest from the FCA for you, plus comments below;
The Upper Tribunal has upheld the Financial Conduct Authority’s (FCA) decisions to ban Stephen Joseph Burdett and James Paul Goodchild from working in financial services.
Mr Burdett and Mr Goodchild previously held senior roles at Synergy Wealth Limited (Synergy) and Westbury Private Clients LLP (Westbury), respectively.
The FCA banned the pair from working in regulated financial services for recklessly exposing pension holders to unsuitable investments.
The Tribunal also found that it was appropriate for the FCA to impose penalties of £265,071 on Mr Burdett and £47,600 on Mr Goodchild.
Because of Mr Burdett, 232 personal pension funds worth over £10 million were switched into high-risk investment portfolios that were obviously unsuitable. The portfolios were created and managed by Mr Goodchild at Westbury, with around 38% of overall holdings linked to a single offshore property developer.
Despite his knowledge that the portfolios were high-risk, Mr Burdett allowed Synergy’s customers to receive reports indicating that their money would be placed in low or medium risk portfolios. Mr Goodchild included the misleading terms ‘cautious’ and ‘balanced’ in the names of 2 of the 3 high-risk portfolios.
In addition, Mr Burdett acted as a director of Synergy despite knowing he did not have the required FCA approval to perform that function. He also failed to co-operate with the FCA’s investigation.
The FCA intervened in 2016 to protect consumers, stopping the pensions business of Synergy and Westbury. Both firms subsequently went into liquidation and were dissolved.
To date, the Financial Services Compensation Scheme (FSCS) has paid out over £1.4m to victims.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said:
“People trusted Mr Burdett and Mr Goodchild with their hard-earned savings and were badly let down. The pair worked together to switch customers’ pensions into obviously unsuitable, high-risk investments”
“They made significant personal profits from their actions. We will not tolerate such conduct and are pleased that the Tribunal agrees.”
The Tribunal noted that “Mr Burdett’s actions have shown little regard for the interests of Synergy’s clients, pension holders whose pensions were transferred to the Westbury SIPP and were invested in ways which Mr Burdett knew were obviously high risk and hopelessly inappropriate.”
In addition, the Tribunal found that “As an experienced and qualified investment manager, Mr Goodchild must have known of the risk of putting together for pension holders of varying risk appetites portfolios with any significant levels of concentration of investment into an obviously high risk project… He completely ignored this risk, without regard to the interests of the pension holders.” The Tribunal was not satisfied that Mr Goodchild’s “cursory due diligence … was even remotely sufficient to constitute reasonable steps to ensure suitability.”
WILMERHALE COMMENT
Commenting on the Upper Tribunal decision published today, Tribunal upholds bans and fines for reckless adviser and fund manager, Imogen Makin, counsel at WilmerHale, said:
“It is interesting that the Upper Tribunal has reduced the amount of the financial penalty imposed by the FCA, providing another example of the regulator’s failure to take into account factors that should legitimately reduce the size of the financial penalty. In this case the FCA had not reflected the tax paid on the financial benefit derived from the breach and sought to disgorge the gross amount (Step 1 of the financial penalty calculation). The Upper Tribunal understandably held that the amount disgorged should reflect the actual financial benefit retained, so reduced it to reflect the tax paid.
“This decision, together with other recent Upper Tribunal decisions, will hopefully cause the regulator to consider more carefully the question of whether reductions should be applied at each step of the financial penalty calculation to account for the facts of the case.”
Be the first to comment