FCA Imposes Fines and Bans on Advisers for Pension Transfer Misconduct

​The Financial Conduct Authority (FCA) has issued bans and fines exceeding £500,000 to two financial advisers, Richard Fenech and Heather Dunne, for their involvement in flawed pension transfer advice resulting in over £126 million being transferred out of defined benefit (DB) schemes. The FCA concluded that these transfers were generally not in the best interests of the clients.

Fenech, the sole director of Financial Solutions Midhurst Limited (FSML), was fined £270,646, while Dunne faced a penalty of £399,817. The FCA's investigation revealed that Dunne, operating as an appointed representative under FSML, advised approximately 92% of her clients to transfer their pension funds, often without adequately considering the suitability of these transfers.

The FCA identified a "flawed two-adviser advice model" where Dunne provided pension transfer advice without knowing how clients' funds would be invested post-transfer. This lack of oversight left clients vulnerable to unsuitable investment risks. Despite warnings from FSML's external compliance consultant regarding the risks associated with this model, Fenech failed to halt its use or ensure that Dunne's advice met regulatory standards.

Both advisers have appealed the FCA's decision to the Upper Tribunal, meaning their bans and fines remain provisional while the appeal is considered. The FCA also noted that Fenech and Dunne's actions demonstrated a lack of integrity, particularly regarding their involvement in a backdated appointed representative agreement submitted to the FCA.

The Financial Services Compensation Scheme (FSCS) has compensated FSML clients over £770,490 thus far, with potential losses estimated at nearly £2 million due to the flawed advice. As FSML and Dunne's trading name, HDIFA, are now in liquidation, the implications of their misconduct continue to affect clients who relied on their guidance.