Fenech v Financial Conduct Authority: Upper Tribunal slashes pension transfer penalties

The Upper Tribunal has upheld prohibition orders against a pension transfer specialist and the principal of her advisory firm while dramatically reducing the financial penalties the Financial Conduct Authority had sought to impose, in a judgement that clarifies how disgorgement and interest should be calculated where regulatory wrongdoing is established but confined to only part of an individual's business.

In Fenech v The Financial Conduct Authority [2026] UKUT 281 (TCC), Judge Anne Redston, sitting with tribunal members Adam Samuel and John Woodman, cut the penalty against Heather Dunne, a former pension transfer specialist, from £399,817 to £41,230, and reduced the penalty against Richard Fenech, owner of her firm Financial Solutions Midhurst Ltd, from £270,646 to £16,046. The decision follows an earlier ruling in April in which the tribunal found that Dunne had acted dishonestly in relation to a backdated appointed representative agreement and had given unsuitable pension transfer advice to at least 18 per cent of her clients, while Fenech had failed to adequately supervise her and had also acted dishonestly, though only in a single, out-of-character instance.

Both prohibition orders were upheld. The tribunal rejected Fenech's argument that his case should be remitted to the Authority in light of findings that departed from its original reasoning, including that he had not, as originally alleged, acted recklessly. Applying established authority that remittal is unnecessary where the regulator would inevitably reach the same conclusion, the tribunal found that Fenech's dishonesty toward his regulator alone would justify prohibition, regardless of other findings in his favour. It also declined to direct that Dunne's order include a "minded to revoke" indication after five years, holding this fell outside its statutory powers on a non-disciplinary reference.

The penalty findings turned substantially on disgorgement. The Authority had argued that Dunne should disgorge the entirety of her pension transfer income because her suitability reports contained systemic defects, including templated passages and inadequate disclosure of transfer disadvantages. The tribunal rejected this, holding that such general compliance failings did not justify total disgorgement, and that the appropriate figure was 18 per cent, mirroring its finding on the proportion of clients who received unsuitable advice. The same percentage was applied to Fenech's share of the relevant income.

The tribunal also departed from the Authority's usual practice of charging interest on disgorgement sums, a departure it emphasised was fact-specific rather than a rejection of standing policy. It found multiple unexplained periods of delay across the roughly nine years between the end of the relevant conduct and the hearing, during which interest rates rose sharply from near-zero levels, and concluded it was not appropriate to charge interest in these circumstances, particularly given the Authority had offered no evidence explaining the gaps.

A further significant finding concerned how Fenech's "relevant income" should be calculated for the purposes of assessing seriousness under the Authority's penalty framework. The Authority had sought to base this on his entire income from his firm, but the tribunal agreed with Fenech's representatives that only income attributable to the appointed representative arrangement with Dunne was an appropriate proxy for the harm caused, since the greater part of his earnings derived from entirely separate business activities unconnected to her conduct.

The tribunal also rejected submissions that a public censure alone would have sufficed for Dunne, noting that dishonesty findings and proven client harm placed her conduct at the more serious end of the spectrum, notwithstanding the financial hardship the Authority had already accepted she would suffer.