A financial adviser has been banned for 13 years, after he was found to have helped 288 clients transfer more than £23m of their pension into high risk assets.
The Insolvency Service, banned Active Wealth Limited’s sole director Darren Antony Reynolds for advising clients to transfer their existing pensions to self-invested personal pension schemes to be invested in risky assets.
Chartered financial planner Reynolds had advised hundreds of clients, including British Steel workers, on the best way to invest their pension funds from December 2014 to February 2018.
But following the firm's liquidation in 2018, an Insolvency Service investigation found that between December 2014 and December 2016, Reynolds had failed to act in the best interests of the company’s clients.
The advice saw clients' funds invested in a portfolio of investments in corporate bonds called Portfolio Six, which were high risk and described as ‘relatively illiquid’ and ‘unregulated’.
The bonds were only available for direct investment to experienced high net worth or sophisticated investors, or those who had received advice from an independent financial company who declared they had the experience and knowledge to understand the risks.
They were specifically excluded from the protection offered by the Financial Services Compensation Scheme when investments were made directly.
Reynolds said Active Wealth had relied upon due diligence undertaken by the fund manager of Portfolio Six.
However, the investigation found that in at least eight applications, Reynolds made inaccurate declarations when describing his clients’ investment experience and appetite for financial risk.
The Insolvency Service said at liquidation, Active Wealth’s clients had claimed more than £10m in compensation from the FSCS as a result of advice received.
However, as individual claims were capped at £50,000, the actual loss suffered by Active Wealth’s clients is more than £24m.
Reynolds was disqualified as a company director for a period of 13 years on May 25.
This means he cannot, directly or indirectly, become involved, without the permission of the court, in the promotion, formation or management of a company.
Rob Clarke, chief investigator at the Insolvency Service, said: "This is a very sad situation for these victims who believed Darren Reynolds and his company was providing professional investment advice in their best interests but instead placed their future financial security in high risk and unsuitable investments.
"13 years is a significant ban and removing Darren Reynolds from the corporate arena will protect other investors from further harm for a lengthy period of time."
Active Wealth was the first BSPS adviser to be stripped of its pension transfer permissions by the Financial Conduct Authority, before entering into liquidation in 2018.
Last year, the FSCS paid £4.4m to former clients of Active Wealth.
sonia.rach@ft.com
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