The Financial Conduct Authority has published a notice stating its intention to ban the chief executive of a financial advice firm and issue a fine of £290,000 for “recklessly” recommending unregulated collective investment schemes and geared traded endowment policies.
In a decision notice published today (23 October) against Paul Reynolds, chief executive at Aspire Personal Finance Limited (previously known as Positive Financial Strategies Limited), the regulator said the adviser “lacks integrity” over sales to eight retail clients.
Mr Reynolds has referred the decision to the Upper Tribunal, which has the power to uphold, vary or cancel the regulator’s decision. He had applied to the Tribunal for an order preventing the FCA from publishing the decision notice, but was unsuccessful.
According to the FCA, Mr Reynolds advised six of the eight clients to invest a total of £1.5m in GTEPs. He also advised seven of those clients to invest at least £591,480 in Ucis, either directly with providers or through a self-invested personal pension or a wrap platform.
A number of the Ucis in which Mr Reynolds’ clients invested have been suspended, resulting in financial losses.
The FCA found that six of these clients had low incomes and/or little or no investment experience and these complex and high risk products were likely to be unsuitable for their needs. In addition, in some instances clients were not aware that they had invested in unregulated investments.
It said six clients had re-mortgaged residential properties, three of which were mortgage-free at the time of seeking advice, to fund the investments.
Of the seven clients who invested in Ucis, three were within ten years of retirement age and were encouraged to invest more than 80 per cent in these products.
The FCA found Mr Reynolds:
• was involved in the falsification of the signatures of two clients on sophisticated investor certificates;
• made investments on behalf of two clients without their knowledge or authorisation;
• produced inflated valuations of clients’ investments in an attempt to mislead them and conceal poor performance;
• submitted loan facility and investment applications on behalf of a number of his clients which contained inflated incomes and other false and misleading information; and
• attempted to mislead the FCA by retrospectively creating various documents and misrepresenting that they were contemporaneous.
With effect from 6 September 2010, Aspire voluntarily varied its permission by removing all its regulated activities. Aspire was placed into voluntary liquidation on 7 September 2010 and dissolved on 20 January 2013.
On 18 March 2011, Mr Reynolds was declared bankrupt but this was automatically discharged after one year.
Tracey McDermott, director of enforcement and financial crime, said: “People go to advisers because they want expert help to make the most of their money. They should be able to trust advisers to act in the customer’s best interest and recommend products which will suit their needs.”
The Tribunal will hear Mr Reynolds’ case on 8 and 9 December 2014.