The Financial Conduct Authority (FCA) has imposed fines of £2,212,316 on Darren Reynolds and £397,400 on Andrew Deeney of Active Wealth for dishonest advice and has both individuals from working in the financial services industry.
According to the FCA, Reynolds put his own interests ahead of those of his consumers and dishonestly created a business model that encouraged recommending high-commission products instead of the best options for customers. Customers of Active Wealth suffered as a result, and he was able to obtain £1.01 million in illegal commissions that were routed through affiliated businesses to hide their source.
The FCA also noted that Reynolds had given dishonest advice to over 670 clients, including 150 British Steel Pension Scheme (BSPS) members who were forced to make a choice concerning their pension. These clients were told to invest their money in products that were not right for them. Reynolds lied to the FCA dishonestly and carelessly permitted the deletion of evidence important to the FCA’s investigation.
Meanwhile, Deeney generated over £200,000 in personal financial advantages by giving Active Wealth customers inappropriate advice so he could collect banned commission payments.
According to the FCA, Deeney continued his misconduct at Fortuna Wealth Management Limited (Fortuna), a company he founded that acquired Active Wealth’s goodwill and client information, where he allegedly made many attempts to mislead the FCA about his role in encouraging clients to make high-risk investments.
511 of Active Wealth’s former customers had received around £19.8m in compensation by June 2023, according to the Financial Services Compensation Scheme (FSCS). At least 270 customers sustained losses that exceeded the FSCS’s £50,000 compensation maximum. Without this cap, the compensation sum would exceed £42.3m.
The Upper Tribunal denied Reynolds’ request for privacy in respect to his Notice on September 20, 2023. In May 2022, Deeney reached a resolution with the FCA.
FCA joint executive director of enforcement and market oversight Therese Chambers says: “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.”