Darren Reynolds of Active Wealth (UK) Limited (Active Wealth) and Andrew Deeney are the latest advisers to be fined and banned from working in the financial industry by the FCA, over what the regulator called dishonest and reckless conduct, including one of the worst cases the regulator says it has dealt with.

According to the FCA, Reynolds ignored customers’ best interests by dishonestly establishing, maintaining and concealing a business model in which the advisers, not the customers, gained profit. He incentivized recommending products that produced the highest commission for himself and received £1.01m ($1.23m) in prohibited commission payments.

“Mr Reynolds, who allowed evidence to be destroyed and who has consistently sought to evade accountability, and Mr Deeney, lied and lied again.”

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight. FCA

The payments were also funneled via companies that were connected to him, and were “intentionally designed to disguise their true origins”.

Destroyed evidence

Over 670 customers were given dishonest advice, with 150 being members of the British Steel Pension Scheme (BSPS). According to the FCA, they were given no option but to put their pension money into investments that were not suitable for them – which Reynolds knew.

The FCA further said that he also mislead the regulator by recklessly destroying evidence relevant to the investigation.

The other adviser, Andrew Deeney, gained £200,000 ($243,782) in banned commission payments by also providing unsuitable advice to Active Wealth customers. His misconduct continued at Fortuna Wealth Management Limited, a firm he established and which purchased Active Wealth’s goodwill and client database. There, he repeatedly mislead the FCA about his role in advising customers to buy into high-risk investments.

“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,” said Therese Chambers, Joint Executive Director of Enforcement and Market Oversight. “Their motivation was based on self-enrichment. Such people have no place in our industry.”

Banned and fined

Besides banning both from working in financial services, the FCA has also fined Reynolds £2,212,316 ($2,704,696), and Deeney £397,400 ($485,639).

After an investigation by the Insolvency Service, Reynolds was disqualified on May 25, 2021 by the High Court from being a company director for failing to act in the best interest of Active Wealth’s customers. He had held the position for 13 years.

Reynolds applied for privacy in relation to his Notice, but the Upper Tribunal refused that application on September 20, 2023. Deeney settled with the FCA in May 2022. 

By June 2023, the Financial Services Compensation Scheme (FSCS) had paid out compensation of over £19.8m ($24.2m) to 511 former customers of Active Wealth. At least 270 of them suffered losses over the FSCS’s compensation cap of £50,000 ($61,000). If there hadn’t been a cap the compensation amount would be over £42.3m ($51.6m).

British Steel Pension Scheme

The FCA has taken many disciplinary actions in relation to faulty advice given to former British Steel Pension members, which include:

• September 2023 – Two advisers were banned and fined £70,000 and £85,606.
• September 2023 – Two former directors of CFP Management Ltd were banned and fined
• July 2023 – Adviser banned and ordered to pay £850,000 in redress to clients.
• June 2023 – Adviser banned, and ordered to make a £106k payment to the Financial Services Compensation Scheme.
• June 2023 – Three more firms forced to reverse misleading pension offers.
• May 2023 – Adviser censured  over incorrect advice to British Steel pensioners.
• February 2023 – 15 more firms named in the row over the redress scheme.
• February 2023 – Two firms, Abbey Lane Financial Associates Limited and Estate Capital Financial Management Limited, forced to stop making deceptive offers to British Steel pensioners.
• January 2023 – Warning issued to firms over a ‘deliberate attempt to exclude’ pensioners from the compensation scheme.