The Upper Tribunal has upheld FCA’s decision to ban Alistair Burns, Director and CF1 of TailorMade Independent Limited, firm that advised on pension transfers and opt-outs, from any significant influence or senior management function because of his lack of competence and capability. It also directed FCA to fine Mr Burns £60,000 for failing to ensure the firm had complied with its obligations under the regulatory regime.
The Tribunal found that customers received wholly unsuitable advice to transfer out of a pension arrangement and into a SIPP, which in turn would invest in specific products and that Mr Burns had a significant financial interest in the outcome of this advice. It found Mr Burns co-owned and directed an unregulated introducer which referred clients to the firm and then received significant amounts of commission from the provider of the product to which the firm advised customers to transfer. Customers were not usually told about the payment of the commission or the amount of it.
FCA said, and the Tribunal confirmed, that if a financial adviser advises a customer to release funds from a pension to invest in an overseas property investment via a SIPP, that the adviser must consider the suitability of both the SIPP and the investments to be held in it.
Mr Burns clearly failed to identify, and the firm failed to manage the conflict. Compensation of around £55.6m has so far been paid by FSCS to customers of the firm, which is around half the approximated losses customers suffered.
Mr Burns had contended that a fellow director, and only that director, was responsible for the firm’s business model, governance and oversight, and that he did inform customers orally about the conflict, which he also tried to mitigate by incentivising advisers on the quality of their work, and not on the outcome of the advice they gave.