The Financial Conduct Authority (FCA) has fined Richard Fenech and Heather Dunne, and banned them from working in financial services, due to pension transfer advice failings.

Fenech was the sole director of Financial Solutions Midhurst Limited (FSML) and was responsible for overseeing Dunne, who was FSML’s appointed representative, trading as HDIFA.

He was fined £270,646, while Dunne was fined £399,817, after the FCA determined that the pair had operated a flawed advice model that put customers’ guaranteed pension benefits at “significant risk”.

Furthermore, the FCA concluded that Dunne had failed to act with due skill, care, and diligence when providing pension transfer advice.

The regulator stated that Dunne had failed to consider the destination of customers’ investments when advising on whether defined benefit (DB) pension transfers were suitable.

This was due to the use of a “flawed two-adviser model”, in which Dunne had provided transfer advice while another firm provided investment advice on the proposed onward investment after the pension transfer was completed.

Therefore, Dunne did not know where her clients’ money was going when advising on the transfer, which the FCA said left customers exposed to the risk of unsuitable pension transfers.

According to the FCA, Dunne advised around 92 per cent of her clients to transfer out of their DB schemes, resulting in more than £126m of funds being transferred, “often against her clients’ best interests”.

While Fenech was responsible for the oversight of HDIFA’s business and was made aware by FSML’s external compliance consultant of the risk arising from HDIFA’s use of the two-adviser advice model, he did not stop HDIFA from operating it.

Furthermore, Fenech did not ensure that Dunne’s pension transfer advice complied with regulatory standards.

The FCA said that Fenech and Dunne also failed to act with integrity due to their involvement in the “dishonest provision” of a backdated appointed representative agreement to the FCA.

Dunne’s fine was reduced from the initial £494,917 after showing this amount would cause her “serious financial hardship”.

Fenech and Dunne have both referred their Decision Notice to the Upper Tribunal, which will determine what the appropriate action is for the FCA to take, and remit the matter to the FCA with directions it feels are appropriate.

“People must be able to trust the advice they receive about their pension,” commented FCA joint executive director of enforcement and market oversight, Therese Chambers.

“The actions of these individuals are wholly unacceptable, as they exposed customers to significant financial risk.

“Ms Dunne provided advice which was fundamentally flawed, and Mr Fenech failed in his responsibilities to oversee her work. In doing so, both demonstrated a complete disregard for customers’ needs through retirement, and the suitability of pension transfers, and it is right we ban them from the industry.”

FSML and HDIFA are both now in liquidation. To date, the Financial Services Compensation Scheme has paid over £770,490 in compensation to FSML clients, with potential total losses estimated at nearly £2m.

This article originally appeared in our sister publication Pensions Age.

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