FCA fines adviser for high risk recommendations

The Financial Conduct Authority (FCA) has fined Paul Reynolds (formerly known as Paul Brian Reynolds) £290,344 and banned him from performing any function in relation to regulated activities on the basis that he is not fit and proper because he lacks integrity.

 

Between 2005 and 2010, while he was an approved person at Aspire Personal Finance Limited, Mr Reynolds recommended a number of complex and high risk products to his clients, many of whom were on low incomes and had little or no investment experience. Mr Reynolds was aware that he could not justify the suitability of these products for his clients.

 

In some cases, Mr Reynolds’ clients were unaware that they had invested in unregulated investments and were not told of the associated risks. Suitability letters found on the clients’ files, which did explain the risks, had not been sent to the clients.

 

During its investigation, the FCA found that Mr Reynolds:

 

  • recklessly recommended high risk investment products to eight retail clients, when he was aware that he could not justify their suitability;
  • was involved in retrospectively creating documents which explained the risks of the products for client files and represented that they were contemporaneous and had been sent to his clients;
  • was involved in retrospectively creating signatures purporting to be the signatures of two clients on sophisticated investor certificates to suggest that UCIS products could legitimately be promoted to them;
  • was involved in producing inflated valuations to conceal the poor performance of the investments that he had recommended;
  • made investments on behalf of two clients without their knowledge or authorisation; and
  • was involved in submitting loan facility and investment applications, on behalf of a number of his clients, which contained inflated incomes and other false and misleading information.

 

Georgina Philippou, acting director of enforcement and market oversight at the FCA said:

 

“People should be able to trust advisers to recommend products which will suit their needs. Today’s fine reflects the fact that we will not hesitate to take action against firms or individuals who fail to put the best interests of their clients first.”

 

On 13 January 2014, Mr Reynolds referred the FCA’s Decision Notice to the Upper Tribunal. On 30 April 2015, Mr Reynolds withdrew his reference.