Fenech and Dunne v FCA: unsuitable pension transfer advice and the limits of the "transfer in isolation" model

The Upper Tribunal (Tax and Chancery Chamber) handed down its judgement on 27 April 2026 in Richard Brian Fenech & Anor v The Financial Conduct Authority [2026] UKUT 162 (TCC), a case arising from defined benefit to defined contribution pension transfer advice given between 2015 and 2017. The decision substantially curtails the FCA's case whilst preserving findings of negligence, dishonesty and supervisory failure against both applicants.

Background and the "transfer in isolation" model

Heather Dunne, a qualified pension transfer specialist (PTS) and appointed representative of Financial Solutions Midhurst Ltd (FSML), operated a "two adviser" model under which she advised on the suitability of a pension transfer whilst a separate IFA advised on the destination investments. Critically, she did not obtain information about those destination funds — including charges — and instead ran her Transfer Value Analysis on the assumption that funds would be held in cash at nil charge. The FCA labelled this the "transfer in isolation" (TII) model and contended it rendered every piece of advice non-compliant.

The FCA had engaged Grant Thornton (GT) to review a sample of 17 of Ms Dunne's files. GT initially assessed eight as suitable; the FCA subsequently directed GT to reclassify those files as non-compliant on the basis of the TII model. It then extrapolated from a 100% non-compliance finding to the whole population of Ms Dunne's clients.

The limitation problem

The Tribunal found that the FCA had been aware of the TII model as a potential misconduct since at least 7 July 2015 — and possibly as early as August 2014 — when it received correspondence confirming Ms Dunne's approach. Under section 66(4) FSMA, the Warning Notice issued on 6 March 2023 fell outside the six-year limitation period. The FCA therefore could not rely on the TII model to impose a penalty on Ms Dunne, nor on the recalibrated file outcomes that derived from it.

The Tribunal's independent file review

Rather than adopting either the original GT assessments or the recalibrated versions, the Tribunal conducted its own de novo review of the 16-file sample. It found that Ms Dunne had given suitable advice in ten cases (62.5%) and unsuitable advice in six (37.5%). Unsuitability arose from failures to consider clients' capacity for loss and instances where the DB scheme benefits clearly outweighed those of the proposed DC arrangement.

Applying Dr Purdon's statistical table to those findings, the Tribunal concluded with 95% confidence that between 18% and 62% of Ms Dunne's total client population had received unsuitable advice. The wide confidence interval — a consequence of the FCA's decision to recalibrate rather than enlarge the sample — meant the burden of proof was met only at its lower bound. The Authority had not proved unsuitable advice beyond 18%.

Beyond suitability, the Tribunal identified systemic compliance failings: templated suitability reports that obscured key disadvantages; failure to check 90% of reports after February 2017 in breach of COBS 19.1.1R; insufficient fact-gathering in five sample cases; and Confirmation Letters sent to ceding schemes before suitability reports had been issued to clients, triggering irreversible transfers prematurely.

Supervisory failure and recklessness

Richard Fenech, as sole director and CF10 holder of FSML, was found to have breached Statement of Principle 7 through inadequate supervision of Ms Dunne. Despite repeated commitments to introduce formal file reviews from as early as 2012, no meaningful oversight was established until shortly before the FCA intervened. He conceded the point under cross-examination.

The recklessness allegation under SoP 1 — founded on his failure to act on warnings from compliance consultant Julian Ellis about the TII model — was rejected. The Tribunal accepted that Mr Fenech had reasonably understood both Ellis's concerns and the 2013 and 2014 FCA Alerts as relating to unregulated investments only, and that his view of critical yield as a limited indicator was consistent with the FCA's own analysis in CP 17/16. After the 2017 Alert he instructed Ms Dunne to change her approach and believed she had done so.

Dishonesty

Both applicants were found to have acted dishonestly in providing the FCA with a backdated appointed representative agreement signed in June 2017 but dated 30 August 2012. Applying the Ivey v Genting test, the Tribunal was satisfied that ordinary decent people would regard the conduct as dishonest, despite the pressure both were under and the administrative nature they attributed to the requirement. Ms Dunne's email advising Mr Fenech to correct the address and regulator references — to avoid making it "abundantly clear it's a document produced after the event" — was particularly telling.

Ms Dunne was additionally found to have acted dishonestly in issuing Confirmation Letters and Advice Declarations to ceding schemes before suitability reports had been provided to clients, though her motivation was to protect clients from expiring transfer values.

Outcome

The applications were allowed in part. Quantum of any penalties and the prohibition notices have been deferred to a further hearing listed for June 2026, at which the Tribunal's factual findings will inform the FCA's decision on appropriate action.