FCA criticizes its financial adviser after British Steel pensions scandal
- A “dishonest” financial advisor is fined and banned from working in the sector
- Darren Reynolds fined £2.2m by the Financial Conduct Authority
- ‘Tricked’ savers into abandoning gold-plated retirement plans
A “dishonest” financial adviser at the center of the British Steel pensions scandal was fined yesterday and banned from working in the industry.
Darren Reynolds was fined £2.2 million by the Financial Conduct Authority after he “misled” savers into abandoning gold-plated retirement plans and putting their money into “high-risk investments”.
The regulator said he had “dishonestly” advised more than 670 people, including 150 on the British Steel Pension Scheme, and that 511 lost £42.3m while he collected more than £1m in fees.
In announcing the fine and ban, the FCA said Reynolds “had a clear disregard for the interests of clients in favor of his own personal benefit”.
Therese Chambers, FCA deputy executive director of enforcement and market oversight, said: “This is one of the worst cases we have seen.”
Target: Port Talbot steelworks, where scandal dates back to 2017
Steelworker activists who lost in what has been described as “the biggest pensions scandal in a generation” welcomed the ruling but warned it was “a pyrrhic victory” given that Reynolds, who has appealed, leaves “many ruined lives in its wake.”
The scandal dates back to 2017, when members of the British Steel Pension Scheme (including many Port Talbot workers) were given the option of leaving their savings in the old scheme or joining a new, less generous one.
Given that the old scheme was likely to fall to the Pension Protection Fund, resulting in a 10 per cent “cut” for savers, and that the new offer would also leave members with less, it was encouraged many workers to withdraw their money completely and move it to a private retirement fund. A total of 8,000 steelworkers were persuaded to transfer a total of £2.8bn, some of it thanks to financial advisers such as Reynolds and his company Active Wealth.
Reynolds, 53, was not the only financial advisor involved in the scandal and it did not target just steelworkers. Another, Andrew Deeney, 57, was also banned by the FCA yesterday and fined £397,400 after receiving £200,000 in commission payments for offering dodgy advice.
The FCA said Reynolds “dishonestly established, maintained and concealed a business model that incentivized recommending products that generated the highest commission for the adviser rather than the best outcome for the client.” The FCA said the Financial Services Compensation Scheme has paid out £19.8 million to 511 former Active Wealth clients. But at least 270 lost more than the £50,000 compensation limit.
Chambers said: ‘Mr Reynolds, who allowed the evidence to be destroyed and who has constantly tried to evade responsibility, and Mr Deeney, lied and lied again. First, trick people into abandoning safe pension plans and putting their retirement money into unsuitable, high-risk investments.
—Then try to hide your bad behavior from us. People like that have no place in our industry.’
Financial adviser Al Rush, who has helped British Steel pension holders get their finances back on track, said: “For these steelworkers and their families, their [Reynolds’s] Actions can never be repaired.