The Financial Conduct Authority has fined Darren Reynolds of Active Wealth Limited and banned him from working in financial services.
Reynolds has been fined £2,212,316 after the regulator alleged he had a clear disregard for customers’ interests in favour of his own personal gain.
The FCA said Reynolds has referred his decision notice to the Upper Tribunal, where he will present his case.
In a statement, the City watchdog said 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 customer.
He “exploited this to the detriment of Active Wealth’s customers” so that he could receive £1.01mn in prohibited commission payments, the FCA said.
This is one of the worst cases we have seen.Therese Chambers, FCAThe FCA said these payments were funnelled via companies connected to Reynolds and were intentionally designed to disguise their true origins.
Reynolds advised more than 670 customers, including 150 British Steel Pension Scheme (BSPS) members who had no option but to make a decision about their pension, to put their money into investments that he knew were not suitable for them.
“Mr Reynolds dishonestly misled the FCA and recklessly allowed the destruction of evidence relevant to its investigation,” the regulator's statement said.
Additionally, the FCA fined Andrew Deeney of Active Wealth £397,400 and banned him from working in financial services.
It said Deeney made personal financial gains exceeding £200,000 by providing Active Wealth customers with unsuitable advice so that he could dishonestly receive banned commission payments.
Mr Reynolds and Mr Deeney lied, and lied again.FCAThe regulator said the misconduct then continued at Fortuna Wealth Management Limited (Fortuna), a firm Deeney established which purchased Active Wealth’s goodwill and client database, where he repeatedly sought to mislead the FCA about his role in advising customers to invest in high-risk investments.
Therese Chambers, joint executive director 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.”
By June 2023, the Financial Services Compensation Scheme (FSCS) had paid compensation of over £19.8mn to 511 of Active Wealth’s former customers.
At least 270 customers suffered losses over the FSCS’s compensation cap of £50,000.
The FCA said were it not for this cap, then the compensation amount would be over £42.3mn.
Reynolds applied for privacy in relation to his notice, but the Upper Tribunal refused that application on September 20, 2023, while Deeney settled his case with the FCA in May 2022.
sonia.rach@ft.com
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