Tribunal Upholds FCA Bans: What the Pension Transfer Failings Mean for Your AR Oversight

The Upper Tribunal has upheld FCA bans against two individuals over pension transfer advice failings, and the details should prompt every IFA with appointed representatives to take a hard look at their oversight arrangements.

The case involves Kevin Dunne and Wendy Fenech. Dunne operated what the tribunal called a "deficient two-adviser model." Fenech, as sole director of Financial Solutions Midhurst, failed to provide adequate oversight of her appointed representative business. Both are now banned from UK financial services.

Let's break down what went wrong and what it means for your practice.

The Two-Adviser Model Problem

The two-adviser model is common in pension transfer work. One adviser handles the pension transfer recommendation, another handles the investment advice for where the funds end up. In theory, this allows specialists to focus on their areas of expertise.

In practice, it creates a gap that the FCA has now explicitly flagged as a compliance risk.

The tribunal found that Dunne failed to consider the suitability of clients' overall investment strategy when recommending pension transfers. He was looking at whether the transfer itself made sense, but not adequately considering what would happen to the money afterwards.

This isn't a technicality. If you recommend a client transfers out of a defined benefit scheme, and that money then goes into unsuitable investments, the transfer recommendation itself becomes questionable. The two decisions are connected. The FCA expects advisers to treat them that way.

The AR Oversight Failure

Fenech's situation is different but equally instructive. She was the sole director of the principal firm and failed to provide adequate oversight of the appointed representative business.

The FCA has been increasingly vocal about principal firm responsibilities. In 2022, they introduced new rules requiring principals to conduct enhanced due diligence on ARs and monitor their activities more closely. The Fenech case shows what "inadequate oversight" looks like when the FCA decides to take action.

If you're a principal firm, consider these questions:

• Do you review a sample of your ARs' advice files regularly? How often?
• When you find issues, do you document the remedial action taken?
• Can you demonstrate that your oversight is proportionate to the risk each AR presents?
• Do you have clear escalation procedures when problems are identified?

The tribunal didn't accept that Fenech's oversight arrangements were sufficient. If yours look similar, that's worth noting.

What "Deficient" Actually Means

The word "deficient" appears repeatedly in the tribunal's findings. It's worth understanding what the FCA considers deficient versus merely imperfect.

A deficient process isn't one where occasional mistakes happen. It's one where the structure itself doesn't adequately protect clients. Dunne's two-adviser model wasn't deficient because one client received bad advice. It was deficient because the model systematically failed to connect two related pieces of advice that should have been considered together.

This distinction matters for your own compliance arrangements. The FCA isn't expecting perfection. They're expecting systems that are designed to catch problems before they harm clients.

Practical Steps to Take Now

If you use a two-adviser model for pension transfers:

1. Document how the two advisers communicate about each case
2. Ensure the pension transfer adviser has visibility of the proposed investment strategy
3. Create a checkpoint where suitability of the combined recommendation is explicitly considered
4. Keep records showing this consideration took place

If you're a principal firm with ARs:

1. Review your oversight framework against the FCA's 2022 requirements
2. Ensure you have documented evidence of regular file reviews
3. Check that your monitoring is proportionate to each AR's risk profile
4. Confirm you have clear procedures for when issues are identified

For all advisers:

Remember that tribunal decisions like this one become part of the regulatory landscape. The FCA will reference them in future enforcement actions. "I didn't know" isn't a defence when the expectations have been publicly clarified through a tribunal ruling.

The Broader Pattern

This case fits into a broader FCA focus on pension transfer advice that has been intensifying since the British Steel Pension Scheme debacle. The regulator has made clear that pension transfers represent one of the highest-risk advice areas, and they're scrutinising both the advice itself and the oversight arrangements around it.

The bans in this case weren't the result of deliberate misconduct. They resulted from systems that the FCA considered inadequate. That's a lower bar than fraud, and it's one that more advisers could potentially fall foul of.

Take the time to review your arrangements. If you're not certain they'd withstand FCA scrutiny, now is the time to strengthen them—not after an enforcement letter arrives.

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