The Upper Tribunal has upheld the Financial Conduct Authority’s decision to ban two former senior executives after pension funds were channelled into high-risk portfolios heavily exposed to a single offshore property developer.
Stephen Joseph Burdett and James Paul Goodchild, who held senior roles at Synergy Wealth Limited and Westbury Private Clients LLP respectively, were found to have recklessly exposed pension holders to unsuitable investments.
The Tribunal also confirmed financial penalties of £265,071 for Burdett and £47,600 for Goodchild.
In total, 232 personal pension funds worth more than £10m were switched into high-risk portfolios created and managed by Goodchild at Westbury. Around 38% of the overall holdings were linked to a single offshore property developer, creating significant concentration risk.
HIGH RISK PROFILE
Despite knowing the portfolios were high risk, Burdett allowed Synergy customers to receive reports suggesting their funds would be placed in low or medium risk investments. Goodchild compounded the issue by using terms such as “cautious” and “balanced” in the names of two of the three portfolios, despite their risk profile.
The Tribunal found that Burdett acted as a director of Synergy without the required FCA approval and failed to co-operate with the regulator’s investigation.
The FCA intervened in 2016, halting the pensions business of both Synergy and Westbury. Both firms later entered liquidation and were dissolved. To date, the Financial Services Compensation Scheme has paid more than £1.4m to affected investors.
BADLY LET DOWN
Therese Chambers, Financial Conduct Authority joint executive director of enforcement and market oversight, says: “People trusted Mr Burdett and Mr Goodchild with their hard-earned savings and were badly let down. The pair worked together to switch customers’ pensions into obviously unsuitable, high-risk investments.
“They made significant personal profits from their actions. We will not tolerate such conduct and are pleased that the Tribunal agrees.”
‘HOPLESSLY INAPPROPRIATE’
The Tribunal stated that “Mr Burdett’s actions have shown little regard for the interests of Synergy’s clients, pension holders whose pensions were transferred to the Westbury SIPP and were invested in ways which Mr Burdett knew were obviously high risk and hopelessly inappropriate”.
It also found that “As an experienced and qualified investment manager, Mr Goodchild must have known of the risk of putting together for pension holders of varying risk appetites portfolios with any significant levels of concentration of investment into an obviously high risk project… He completely ignored this risk, without regard to the interests of the pension holders”.
The Tribunal was not satisfied that Mr Goodchild’s “cursory due diligence… was even remotely sufficient to constitute reasonable steps to ensure suitability.”
