The UK Financial Conduct Authority (FCA) has decided to ban Mr Richard Fenech and Ms Heather Dunne from working in financial services and fine them £270,646 and £399,817 respectively.
The FCA found that the pair operated a flawed advice model that put customers’ guaranteed pension benefits at significant risk, and that Ms Dunne failed to act with due skill, care and diligence when providing pension transfer advice.
Mr Fenech was the sole director of Financial Solutions Midhurst Limited (FSML) and responsible for overseeing Ms Dunne, who was FSML’s appointed representative (trading as HDIFA).
Ms Dunne failed to take into account the destination of the customers’ investments when advising whether defined benefit pension transfers were suitable. This was due to the use of a flawed two-adviser advice model in which Ms Dunne provided the pension transfer advice while another firm provided investment advice on the proposed onward investment after the pension transfer had concluded.
As a result, Ms Dunne did not know where her clients’ money was going when advising on the transfer, leaving customers exposed to the risk of unsuitable pension transfers.
Ms Dunne advised approximately 92% of her clients to transfer out of their DB pension schemes, resulting in over £126m of funds being transferred, often against her clients’ best interests.
Mr Fenech was responsible for the oversight of HDIFA’s business. However, despite being made aware by FSML’s external compliance consultant of the risk arising from HDIFA’s use of the two-adviser advice model, Mr Fenech did not stop HDIFA from operating it. He also failed to ensure that Ms Dunne’s pension transfer advice complied with regulatory standards.
Mr Fenech and Ms Dunne also failed to act with integrity because of their involvement in the dishonest provision of a backdated appointed representative agreement to the FCA.
Mr Fenech and Ms Dunne have referred the FCA’s decisions to the Tribunal.
Ms Dunne’s fine was reduced to £399,817 from £494,917, having shown this amount would cause her serious financial hardship.
FSML and HDIFA are both now in liquidation. To date, the Financial Services Compensation Scheme (FSCS) has paid over £770,490 in compensation to FSML clients, (with potential total losses estimated at nearly £2m) because of losses suffered by those clients following advice they received.
