The UK’s Financial Conduct Authority (FCA) has banned five directors from three firms and fined them more than £1 million ($1.3 million) for “acting without integrity” regarding pension advice, and for misleading the regulator.
The FCA said that the directors’ “reckless behavior” prompted more than 2,000 customers to invest approximately £76 million ($98.5 million) of their pension assets into products that invested in risky illiquid assets.
The regulator fined Thomas Ward and Andrew Page of Financial Page Ltd. £416,558 and £321,033, respectively, and fined Aiden Henderson, a director at Henderson Carter Associates Limited, £179,179. It also fined Robert Ward and Tristan Freer, directors at Bank House Investment Management Limited, £88,100 and £52,725, respectively.
“The directors should have known that the products were unlikely to be suitable for retail customers, except in very limited circumstances, but acted recklessly in closing their minds to the obvious risks,” the FCA said regarding all of the directors except Ward. “They were all approved persons in a controlled function at their firms and so should have known that by using the pension review and advice process they were acting recklessly.”
As for Ward, he was not approved by the FCA, and was considered a de facto director.
“Ward disregarded the interests of FPL’s customers and showed a willingness to enrich himself at their expense,” said the FCA. “Ward also took deliberate steps to control and influence the information that FPL disclosed to the FCA and encouraged Mr. Page to withhold important information and deliberately drafted communications that were false and/or misleading.”
The five directors have referred the decision notices issued against them to the Upper Tribunal where they will present their respective cases. The FCA said that any findings in the decision notices are therefore provisional and reflect the FCA’s belief as to what occurred and how it considers their behavior should be characterized. The Upper Tribunal will determine the appropriate action for the FCA to take, if any, and will remit the matter to the FCA with directions the Upper Tribunal considers appropriate.
“HCA, FPL and BHIM held themselves out to customers as providing bespoke independent investment advice,” the FCA said in a release. “But that did not reflect the reality of the service that was provided. In reality customers were recommended pension switches and pension transfers to products that invested in high risk, illiquid assets which were unlikely to be suitable for them.”
As of Jan. 29, the Financial Services Compensation Scheme has paid compensation of £26.8 million to 1,106 customers of FPL, HCA, and BHIM in relation to the matter, and is investigating further claims.