Boss who cost clients £24 million from their pension pots banned for 13 years

23 June 2021

Darren Antony Reynolds, aged 51, from Willenhall, West Midlands has been banned from being a company director for a period of 13 years after advice he provided resulted in clients losing £24 million from their pension funds.

Reynolds was the sole director of Active Wealth (UK) Limited, an independent financial advice company. During his time at Active Wealth, he provided advice to nearly 300 clients on how best to invest their pension funds. This advice was given in the period between December 2014 and February 2018, at which point the company went into liquidation.

An investigation carried out by the Insolvency Service highlighted the fact that between December 2014 and December 2016, Reynolds had not acted in the best interests of the company’s clients. Prompted by Reynolds, hundreds of clients moved over £23 million from their existing pensions to Self-Invested Personal Pension Schemes (SIPPs), meaning that their funds were invested in a portfolio of investments in corporate bonds called Portfolio Six. They were extremely high risk and described as ‘relatively illiquid’ and ‘unregulated’. They were also excluded from the protection offered by the Financial Services Compensation Scheme (FSCS) when direct investments were made.

In fact, the bonds were only available for direct investment to experienced high net worth or sophisticated investors, or individuals who had taken guidance from an independent financial company who stated that they had both the experience and understanding to fully appreciate the risks.

According to Reynolds, Active Wealth acted upon due diligence that was undertaken by Portfolio Six’s fund manager. He would have been aware, however, or certainly should have been aware, that this would not be either impartial or independent, as Active Wealth’s directors were associated with companies within Portfolio Six.

The investigation concluded that in at least eight applications, Reynolds made false declarations in terms of describing the investment experience of his clients, and also the financial risks that they were willing to take.

Active Wealth clients claimed over £10 million in compensation from the FSCS in relation to the advice that they had received. Individual claims were capped at £50,000, however, so the true amount lost by Active Wealth clients actually equates to more than £24 million.

In the Manchester High Court of Justice, on 25 May 2021, Darren Reynolds was disqualified as a company director for 13 years. What this means is that he cannot become involved in the promotion, formation, or management of a company without the permission of the court during that time.

 


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