The Financial Conduct Authority (FCA) has taken action against two financial advisers for providing “dishonest” pension transfer advice.

Darren Reynolds and Andrew Deeney of Active Wealth have been handed fines of £2.2m and £397,400, respectively, and both have been banned from working in financial services.

The regulator said that Reynolds had a “clear disregard” for customers’ interests in favour of his own personal gain, having established and then concealed a business model which incentivised recommending products that produced the highest commission for the adviser rather than the best outcome for the customer. The FCA stated that he exploited this to the detriment of Active Wealth’s customers so that he could receive £1.01m in prohibited commission payments.

These payments were funnelled via companies connected to Reynolds and were intentionally designed to disguise their true origins.

Reynolds is estimated to have dishonestly 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.

The FCA also suggested that he had dishonestly misled the regulator and “recklessly” allowed the destruction of evidence relevant to its investigation.

Reynolds has referred his Decision Notice to the Upper Tribunal where he will present his case. He applied for privacy in relation to his Notice, but the Upper Tribunal refused this application last week.

The FCA also fined and banned Deeney having found he made personal financial gains exceeding £200,000 by providing Active Wealth customers with unsuitable advice so that he could dishonestly receive banned commission payments.

Deeney’s misconduct then continued at Fortuna Wealth Management, a firm he established which purchased Active Wealth’s client database, where the FCA suggested he repeatedly sought to mislead the regulator about his role in advising customers to invest in high-risk investments. Deeney settled his case with the FCA in May 2022.

By June this year, the Financial Services Compensation Scheme (FSCS) had paid compensation of over £19.8m to 511 of Active Wealth’s former customers. At least 270 customers suffered losses over the FSCS’s compensation cap of £50,000. Were it not for this cap then the compensation amount would be over £42.3m.

Joint executive director of enforcement and market oversight at the FCA, Therese Chambers, said: “This is one of the worst cases we have seen. Reynolds, who allowed evidence to be destroyed and who has consistently sought to evade accountability, and 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.”

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