1

DECISION NOTICE

1.
ACTION

1.1.
For the reasons given in this Notice, the Authority has decided to:

(1)
impose on Mr Frank Oxberry a financial penalty of £241,869 pursuant to

section 66 of the 2000 Act;

(2)
withdraw, pursuant to section 63 of the 2000 Act, the approval given to Mr

Oxberry to perform the SMF27 (Partner) function at SMP; and

(3)
make an order, pursuant to section 56 of the 2000 Act, prohibiting Mr Oxberry

from performing any function in relation to any regulated activity carried on

by an authorised person, exempt person or exempt professional firm.

2.
SUMMARY OF REASONS

Mr Oxberry has referred this Decision Notice to the Upper
Tribunal to determine, in the case of the decision to impose a
disciplinary sanction: what (if any) the appropriate action is
for the Authority to take, and remit the matter to the
Authority with such directions as the Tribunal considers
appropriate; and in relation to the prohibition order and
withdrawal of approval: whether to dismiss the reference or
remit it to the Authority with a direction to reconsider and
reach a decision in accordance with the findings of the
Tribunal.

Therefore, the findings outlined in this Decision Notice reflect
the FCA’s belief as to what occurred and how it considers the
conduct of Mr Oxberry should be characterised. The proposed
action outlined in the decision notice will have no effect
pending the determination of the case by the Tribunal. The
Tribunal’s decision will be made public on its website.

2.1.
Mr Oxberry was approved by the Authority to perform the CF4 (Partner) and CF30

(Customer) controlled functions at St Martin’s Partners LLP (“SMP or “the Firm”)

during the Relevant Period (1 October 2015 to 31 July 2016). SMP was a small

financial advice firm based in Essex which was authorised by the Authority during

the Relevant Period with permission to conduct regulated activities, including

advising on Pension Transfers and Pension Opt Outs.

2.2.
During the Relevant Period, SMP partnered with First Review Pension Services Ltd

(“FRPS”), an introducer firm which was not authorised by the Authority, to design

and operate the Pension Transfer Model. FRPS had a material financial interest in

promoting investments offered by its parent company, The Resort Group (“TRG”),

a property developer based in Gibraltar offering investment opportunities in hotel

developments in Cape Verde. These investments were high-risk, illiquid and

unregulated property investments and unlikely to be covered by FOS or FSCS

protection and therefore unlikely to be suitable for retail clients. The Authority

considers that FRPS designed the Pension Transfer Model, in conjunction with

SMP, with a view to bringing about investments of SMP clients’ pension funds into

TRG. SMP, as a firm authorised by the Authority, had a critical role in that process,

namely to provide advice to those clients and thereby provide the statutory basis

upon which the trustees of the ceding pension schemes were permitted to

authorise the release of members from their schemes.

2.3.
Under the Pension Transfer Model, SMP failed to gather sufficient information

before advising clients on the appropriateness of transferring out of their Defined

Benefit Pension Schemes. SMP did not properly take account of clients’ financial

circumstances and objectives, their attitude to risk and their capacity for loss.

Additionally, SMP did not take into account the nature, risks and fees of the actual

onward investment and instead based its analysis and advice on a generic onward

investment across those clients who were subject to the Pension Transfer Model.

Investment advice was intended to be subsequently provided to the clients by the

Overseas Adviser Firm, a financial advisory group based in Cyprus and not

authorised by the Authority, and which was a business partner of FRPS and TRG.

2.4.
This meant that SMP was not in a sufficiently informed position to give its clients

appropriate advice on the nature of the risks or benefits associated with

transferring their pensions. Although SMP cautioned its clients that its advice was

subject to limited information and in the majority of cases advised them not to

transfer, the fact that its clients had obtained advice from SMP, a firm authorised

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by the Authority, nevertheless provided the statutory basis upon which the

trustees of the ceding pension schemes were permitted to authorise the release

of those members from their schemes. This was not the case for a very small

number of SMP’s clients whose CETV was below the minimum threshold of

£30,000, and for whom the trustees were not under a statutory obligation to

check that they had received appropriate independent advice prior to making a

transfer.

2.5.
In addition to FRPS, at least 16 other introducers introduced clients who were

advised by SMP during the Relevant Period. SMP advised at least 547 clients under

the Pension Transfer Model during the Relevant Period, of which 440 clients were

introduced to SMP by FRPS. The total value of the Defined Benefit Pension

Schemes on which SMP advised under the Pension Transfer Model was just under

£60 million, with an average value of approximately £104,000.


2.6.
SMP retained 30% of the fees charged to clients under the Pension Transfer Model

after paying 70% of the fees to SMP’s two advisers, Mr Douglas and Mr Martin,

who provided advice under the model. In total, Mr Oxberry received £90,433 in

respect of the financial benefit from the fees generated from the Pension Transfer

Model.

2.7.
On 14 June 2019 SMP entered liquidation. The FSCS declared SMP in default on

23 September 2019 and is investigating claims made by SMP’s clients who were

advised under the Pension Transfer Model. As at 26 May 2022, the FSCS had paid

over £9 million in compensation to SMP’s clients as a result of loss they had

suffered following advice they had received from SMP.

Mr Oxberry’s misconduct

2.8.
The Authority considers that Mr Oxberry failed to comply with Statement of

Principle 1 during the Relevant Period in that he failed to act with integrity in

carrying out his accountable functions as CF4 (Partner) at SMP. Mr Oxberry’s

actions in relation to SMP’s design and operation of the Pension Transfer Model

were reckless. In particular, Mr Oxberry:

(a) failed to address the significant risk that clients introduced to SMP by FRPS

for the purpose of receiving advice under the Pension Transfer Model would

be encouraged by the Overseas Adviser Firm to transfer out of their Defined

Benefit Pension Schemes and invest in high-risk, illiquid and unregulated

property investments offered by TRG which were unlikely to be suitable for

them, notwithstanding the clear indications he received of FRPS’s material

financial interest in promoting investments offered by TRG. This risk would

have been clear to Mr Oxberry particularly in light of his experience as a

financial adviser and his senior position as CF4 (Partner) at SMP. In permitting

SMP to operate the Pension Transfer Model with FRPS, Mr Oxberry closed his

mind to the significant risk associated with the Firm partnering with FRPS, and

unreasonably exposed SMP’s clients to this risk;

(b) failed to have regard to the clear deficiencies in the Pension Transfer Model

before permitting the expansion of SMP’s business model to include this advice

process, notwithstanding that it constituted a significant departure from SMP’s

usual advice model. The clear deficiencies included that: (i) it failed to take

into account the client’s attitude to risk, meaning SMP was unable to ascertain

whether a Pension Transfer was suitable in accordance with the client’s risk

tolerance; and (ii) confirmation of advice letters would be issued to the

trustees of the ceding schemes at a point where clients had received very

limited advice. In doing so, he closed his mind to the risk that SMP’s clients’

pension funds would be transferred out of their Defined Benefit Pension

Schemes into investments which were unsuitable for them;

(c) failed to take reasonable steps to ensure that SMP performed sufficient due

diligence on its partner introducers and the investments which they promoted

to clients. This was particularly important as SMP was partnering with a large

number of introducers and Mr Oxberry was responsible for business

development at the Firm. In doing so, he closed his mind to the risks that

would arise from rapidly expanding SMP’s business operations to advise

clients introduced by unknown introducers using the Pension Transfer Model;

(d) failed to take reasonable steps to ensure that: (i) SMP obtained independent,

expert opinion from SMP’s Compliance Consultant to verify the compliance of

the Pension Transfer Model; or (ii) these steps were or had been taken, both

prior to its implementation and during its operation, notwithstanding the

novelty of the advice model for SMP’s business and the clear risks of detriment

it posed to SMP’s clients. In doing so, Mr Oxberry closed his mind to the

significant risks associated with the Pension Transfer Model;

(e) failed to take reasonable steps to ensure the effectiveness of SMP’s

compliance function. The reduced effectiveness of SMP’s compliance function,

at a time of the reduced office hours of the other CF4 Partner and CF10

(Compliance Oversight) in advance of his planned retirement, and the lack of

experience and relevant qualification of SMP’s Compliance Manager, to whom

day-to-day compliance responsibilities had been delegated, must have been

clear to Mr Oxberry as the other of the two CF4 Partners at SMP. Mr Oxberry

should have exercised a greater degree of scrutiny over the effectiveness of

SMP’s compliance function, especially in circumstances where the compliance

function was tasked with verifying a high-risk and novel advice process which

constituted a significant departure from SMP’s usual advice model, and a rapid

expansion of SMP’s business operations. However, Mr Oxberry failed to

exercise any such oversight, and permitted the Pension Transfer Model to

operate until the end of the Relevant Period. In doing so, he closed his mind

to the risk that the advice received by clients was not compliant with the

relevant requirements in COBS; and

(f) failed to respond adequately to a variety of warning signs he received during

the operation of the Pension Transfer Model in respect of the clear deficiencies

of the advice process and, in doing so, he closed his mind to the clear risks of

detriment it posed to SMP’s clients. Mr Oxberry was aware, however, of the

numbers of clients advised under the model, and that the corresponding fees

generated from them (from which Mr Oxberry derived financial benefit)

substantially increased up to the end of the Relevant Period.

2.9.
The Authority considers Mr Oxberry’s failure to comply with Statement of Principle

1 to be serious because:

(a) it related to a large number of clients whom he took no steps to protect;


(b) it would have been clear to Mr Oxberry that clients introduced to SMP by FRPS

would be encouraged to invest into high-risk, illiquid and unregulated

property investments offered by TRG, which were unlikely to be suitable for

retail clients, yet he closed his mind and took no steps to address this risk;

(c) in failing to take reasonable steps to ensure that sufficient due diligence was

performed on SMP’s partner introducers, Mr Oxberry’s misconduct

unreasonably exposed the Firm’s clients to a significant risk that their pension

funds would be transferred into investments which were unsuitable for them;

(d) the deficiencies of the Pension Transfer Model would have been clear to Mr

Oxberry as an experienced financial adviser and a senior manager at SMP;

and

(e) Mr Oxberry obtained substantial financial benefits as a result of his failings.


2.10.
The Authority therefore has decided to impose on Mr Oxberry a financial penalty

of £241,869 for his breach of Statement of Principle 1.

2.11.
As a result of Mr Oxberry closing his mind to the clear risks described in paragraph

2.8 above, Mr Oxberry was reckless and failed to act with integrity. For this

reason, the Authority considers he is not fit and proper to perform any function in

relation to any regulated activity carried on by an authorised person, exempt

person, or exempt professional firm. The Authority therefore has decided to make

an order prohibiting Mr Oxberry from performing any such functions at an

authorised person, exempt person, or exempt professional firm. The Authority

considers that doing so is necessary, in order to secure an appropriate degree of

protection for consumers.

2.12.
The Authority also has decided to withdraw Mr Oxberry’s approval in relation to

the performance of the SMF27 (Partner) function at SMP. The Authority considers

that doing so is necessary in order to secure an appropriate degree of protection

for consumers.

3.
DEFINITIONS


3.1.
The definitions below are used in this Notice:


“the 2000 Act” means the Financial Services and Markets Act 2000;


“the 2001 Order” means the Financial Services and Markets Act 2000 (Regulated

Activities) Order 2001;

“the 2015 Act” means the Pension Schemes Act 2015;

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“the 2015 Regulations” means the Pension Schemes Act 2015 (Transitional

Provisions and Appropriate Independent Advice) Regulations 2015;

“ACER” means ACER IM Ltd (dissolved on 29 January 2019);


“the ACER Introducers Agreement” means a partially executed agreement dated

23 November 2015 between ACER and SMP for ACER to introduce third party

introducers to SMP;

“the Authority” means the Financial Conduct Authority;

“CETV” means cash equivalent transfer value, which is the cash value of benefits

which have been accrued to, or in respect of, a member of a pension scheme at

a particular date, representing the expected costs of providing the member’s

benefits within the scheme;

“COBS” means the Conduct of Business Sourcebook, part of the Handbook;


“Compliance Consultant” means the independent, third-party compliance

consultancy engaged by SMP during the Relevant Period;

“Compliance Manager” means SMP’s compliance manager to whom Mr Cuthbert

delegated compliance responsibilities throughout the Relevant Period;

“the COO” means the Chief Operating Officer;


“Defined Benefit Pension Scheme” means an occupational pension scheme as

defined by Article 3(1) of the 2001 Order, namely where the amount paid to the

beneficiary is based on how many years the beneficiary has been employed and

the salary the beneficiary earned during that employment (rather than the value

of their investments);

“DEPP” means the Authority’s Decision Procedure and Penalties Manual, part of

the Handbook;

“EG” means the Authority’s Enforcement Guide set out in the Handbook;

“FOS” means the Financial Ombudsman Service;

“FRPS” means First Review Pension Services Ltd (dissolved on 12 September

2017);

“the FRPS Introducers Agreement” means an agreement between FRPS and SMP

dated 1 April 2016 for FRPS to introduce clients to SMP;

“FSCS” means the Financial Services Compensation Scheme;


“Full Advice Model” means a Pension Transfer advice model where a single adviser

gives defined benefit transfer advice and investment advice on the proposed

onward investment, in order for the Pension Transfer to proceed;

“the Handbook” means the Authority’s Handbook of rules and guidance;


“Mr Cuthbert” means Alec Cuthbert, a qualified Pension Transfer Specialist who

held the CF4 (Partner), CF10 (Compliance Oversight), CF11 (Money Laundering

Reporting), CF30 (Customer) and Responsible for Insurance Mediation functions

at SMP during the Relevant Period;

“Mr Douglas” means Adrian Douglas, a qualified Pension Transfer Specialist who

held the CF30 (Customer) function at SMP during the Relevant Period;

“Mr Martin” means Liam Martin, a qualified Pension Transfer Specialist who held

the CF30 (Customer) function at SMP during the Relevant Period;

“Mr Oxberry” means Frank Oxberry;


“the October 2016 Meeting” means the meeting the Authority held with Mr

Oxberry, Mr Cuthbert and Mr Douglas on 3 October 2016;

“the Overseas Adviser Firm” means a financial advisory group based in Cyprus

which was not authorised by the Authority and which was a business partner of

FRPS and TRG;

“Pension Opt Out” has the meaning given in the Handbook and includes a

transaction resulting from the decision of a retail client to opt out of an

occupational pension scheme to which his employer contributes and of which he

is a member;

“Pension Transfer” has the meaning given in the Handbook and includes the

transfer of deferred benefits from an occupational pension scheme (with

safeguarded benefits, such as a Defined Benefit Pension Scheme) to a personal

pension scheme;

“Pension Transfer Model” means the Pension Transfer advice model operated by

SMP during the Relevant Period characterised by advice provided solely on the

basis of critical yield values of the ceding scheme against a generic scheme with

no consideration of the client’s final investment;

“Pension Transfer Specialist” has the meaning given in the Handbook and includes

an individual appointed by a firm to check the suitability of, amongst other things,

a Pension Transfer, who has passed the required examinations as specified in the

Training and Competence Sourcebook, part of the Handbook;

“Personal Recommendation” means a recommendation that is advice on transfer

of pension benefits into a personal pension or SIPP, and is presented as suitable

for the client to whom it is made, or is based on a consideration of the client’s

circumstances;

“QROPS” means qualifying recognised overseas pension scheme, which is a

pension scheme established outside the UK which fulfils certain criteria by HM

Revenue & Customs to receive transfers from pension schemes registered in the

UK;

“RDC” means the Regulatory Decisions Committee of the Authority (see further

under Procedural Matters below);

“Relevant Period” means 1 October 2015 to 31 July 2016;

“SMP” or “the Firm” means St Martin’s Partners LLP;

“Statements of Principle” means the Authority’s Statements of Principle and Code

of Practice for Approved Persons;

“Suitability Report” means the report which a firm must provide to its client under

COBS 9.4 which, amongst other things, explains why the firm has concluded that

a recommended transaction is suitable for the client;

“TRG” means The Resort Group Plc, a property developer based in Gibraltar

offering investment opportunities in hotel developments in Cape Verde;

“the Tribunal” means the Upper Tribunal (Tax and Chancery Chamber);


“TVAS” means ‘transfer value analysis’ and is the comparison that a firm must

carry out in accordance with COBS 19.1.2R when a firm gives advice or a Personal

Recommendation about, amongst other things, a Pension Transfer;

“TVAS Report” means a document that reports to the client in respect of the

comparison firms are required to carry on in accordance with COBS 19.1.2R;

“Two-Adviser Model” means a Pension Transfer advice model operated by some

firms where one firm gives defined benefit transfer advice and another firm, acting

as an introducer, gives investment advice on the proposed onward investment, in

order for the Pension Transfer to proceed; and

“Warning Notice” means the Warning Notice given to Mr Oxberry dated 28

September 2022.

4.
FACTS AND MATTERS


Mr Oxberry and SMP


4.1.
Mr Oxberry was approved by the Authority to perform the CF4 (Partner) function

at SMP from July 2011 and the CF30 (Customer) function at SMP from April 2012

and held these functions throughout the Relevant Period. Prior to his approval as

CF4 (Partner) and CF30 (Customer) at SMP, Mr Oxberry was approved by the

Authority at other firms authorised by the Authority as CF21 (Investment Adviser)

and as CF30 (Customer).

4.2.
SMP was a small financial advice firm based in Chelmsford, Essex which was

authorised by the Authority during the Relevant Period to, amongst other things,

advise on Pension Transfers and Pension Opt Outs. SMP was formed as a

partnership between Mr Oxberry and Mr Cuthbert. SMP entered liquidation on 14

June 2019.

4.3.
Throughout the Relevant Period, Mr Oxberry and Mr Cuthbert were the only two

CF4 Partners at SMP and were both the owners of the Firm. Mr Oxberry has

described himself as being in charge of the Firm and being responsible for its

business development.

4.4.
Mr Cuthbert was the Firm’s CF10 (Compliance Oversight) and delegated

responsibility for day-to-day compliance oversight to the Compliance Manager.

The Compliance Manager, unlike Mr Cuthbert, was not a qualified Pension Transfer

Specialist, nor did he hold compliance related controlled functions.

4.5.
Mr Douglas and Mr Martin, who were both employees of a company which they

owned jointly, were brought into SMP as consultants by Mr Oxberry in September

2015 and provided advice to Pension Transfer clients. Both Mr Douglas and Mr

Martin provided advice to SMP’s clients under the Pension Transfer Model

throughout the Relevant Period. Mr Oxberry did not himself provide direct advice

to clients of SMP during the Relevant Period.

4.6.
During the Relevant Period, SMP operated out of a small, open plan office with Mr

Oxberry, Mr Martin, Mr Douglas and the Compliance Manager all sitting in close

proximity on the same floor.

Pension transfers


4.7.
Pensions are a traditional and tax-efficient way of saving money for retirement.

The benefits someone obtains from their pension, particularly under a Defined

Benefit Pension Scheme, can have a significant impact on their quality of life during

retirement and, in some circumstances, can affect when an individual is able to

retire. A Defined Benefit Pension Scheme is particularly valuable because it offers

a secure, guaranteed income for life to members, which typically increases each

year in line with inflation.

4.8.
It is possible to “transfer out” of a Defined Benefit Pension Scheme. This involves

the scheme member giving up the guaranteed benefits associated with

membership in exchange for a CETV, which is typically then invested in a defined

contribution pension. Pursuant to section 48 of the 2015 Act, where the value of

the assets in a Defined Benefit Pension Scheme exceeds £30,000, pension

providers must ensure members take “appropriate independent advice” before

allowing a transfer to proceed. Pension Transfer Specialists are suitably

qualified individuals with permission to advise on such Pension Transfers in

accordance with the Authority’s rules.

4.9.
Unlike a Defined Benefit Pension Scheme, a defined contribution pension does not

provide a guaranteed income for its members but sets the payments that are

required to be paid into the fund to provide a pension benefit, and is itself highly

dependent on the performance of the underlying investment. Pursuant to COBS

19.1.6G, the Authority sets out a general starting assumption for an authorised

firm that transferring out of a Defined Benefit Pension Scheme will not be suitable

for a retail client, unless the firm can clearly demonstrate, on contemporaneous

evidence, that the transfer is in the client’s best interests. This is in light of the

valuable guaranteed benefits offered by Defined Benefit Pension Schemes.

4.10.
Pension Transfer Specialists such as Mr Douglas and Mr Martin must also be

overseen by senior managers like Mr Oxberry, who take appropriate practical

responsibility for their firms’ arrangements in accordance with relevant regulatory

requirements. This ensures robust governance arrangements, well-defined lines of

responsibility, effective internal control mechanisms to monitor and report risks as

well as orderly record-keeping, to enable the Authority to monitor the firm’s

compliance with requirements.

4.11.
Authorised firms and Pension Transfer Specialists act as gatekeepers between

clients and the transfer of their pension. Accordingly, clients place significant trust

in them to provide advice on Defined Benefit Pension Scheme transfers. It is the

responsibility of the Pension Transfer Specialist to understand the client’s needs

and account for all the relevant individual circumstances and how these might

affect the advice provided when advising on the suitability of any Pension Transfer.

FRPS/TRG/ACER/The Overseas Adviser Firm


4.12.
FRPS was a UK firm which was not authorised by the Authority. TRG was the parent

company of FRPS from the start of the Relevant Period until 7 July 2016. FRPS was

dissolved on 12 September 2017.

4.13.
On 8 February 2016, The Pensions Regulator issued a Final Notice, in respect of

an Occupational Pension Scheme which identified Matthew Welsh, a Director of

ACER, a firm not authorised by the Authority, as a former Trustee of that scheme,

in which the underlying investments were found to be high risk and illiquid. These

investments were considered by an independent review to be promising

implausibly high returns, including investments in TRG, which were described as

being in a class of investments which had been highlighted by Action Fraud as

“potentially fraudulent”. On 11 July 2016, a BBC Panorama programme aired which

focused on FRPS’s close connections to TRG, a property developer based in

Gibraltar which offered investments in hotel developments in Cape Verde, and how

FRPS was said to have solicited pension reviews and encouraged pension transfers

into TRG’s investments.

4.14.
The property investments offered by TRG were: (1) illiquid as they could only be

sold upon completion and potentially lacked a viable secondary market; and (2)

unlikely to be covered by FOS or FSCS protection. These investments were high

risk and were unlikely to be suitable for retail clients.

4.15.
According to Mr Martin, FRPS was a business partner of the Overseas Adviser Firm,

a financial advisory group based in Cyprus which was not authorised by the

Authority and which did not have the relevant permissions to advise on pension

transfers in the UK.

Design of the Pension Transfer Model


4.16.
In October 2015, Mr Douglas was introduced through Mr Martin to Mr Welsh. Mr

Welsh introduced introducers to SMP, including FRPS. Mr Welsh was seeking a

partner for FRPS, which itself was seeking a firm authorised by the Authority to

assist with providing the transfer advice component of advice under an advisory

model which was similar to a Two-Adviser Model.

4.17.
In October 2015, discussions took place between SMP, FRPS and ACER, which

were attended by Mr Oxberry, Mr Douglas and Mr Martin, following which it was

agreed that an advice model, the Pension Transfer Model, would be established at

SMP. During those discussions, Mr Oxberry agreed SMP would establish an advice

process which would become the Pension Transfer Model. Mr Douglas described Mr

Oxberry’s sign-off of the Pension Transfer Model as follows: “[…] Mr Welsh had a

chat with all of us, but mainly Frank because if Frank didn’t agree to run the

business through his company then there wasn’t one to be run through.” All clients

advised using the Pension Transfer Model were brought to SMP via introducers or

financial advisers.

4.18.
At least 547 clients were advised by SMP using the Pension Transfer Model during

the Relevant Period, of which 440 were introduced to SMP via FRPS. The total

value of the Defined Benefit Pension Schemes of these 547 clients was just under

£60 million, with an average value of approximately £104,000. According to Mr

Douglas, FRPS gave its assurances to SMP that it would ensure that all clients

would be fully advised by the Overseas Adviser Firm prior to those clients

proceeding with Pension Transfers. In reality, the confirmation of advice letters

provided by SMP, as an authorised independent adviser, satisfied the requirement

under section 48 of the 2015 Act that the trustees of the members defined benefit

scheme must check that those members had received “appropriate independent

advice” before proceeding with a Pension Transfer, thereby providing the legal

authority to the trustees of clients’ ceding schemes to release members from their

schemes.

4.19.
The Authority considers that Mr Oxberry received clear indications during the

Relevant Period of the risks to SMP’s clients arising from FRPS, TRG and the

Overseas Adviser Firm being connected entities with a shared financial interest in

promoting TRG’s high-risk property investments. In particular:

(a)
in or around mid-October 2015, Mr Oxberry and Mr Douglas attended a

meeting with the COO of TRG. This meeting took place during the time in

which it was proposed to Mr Oxberry that SMP should advise clients

introduced by FRPS, and the discussions related to developing an advice

process (which would become the Pension Transfer Model) for SMP to advise

FRPS’s clients;

(b)
on 24 October 2015, following their meeting, the COO of TRG emailed Mr

Douglas, copying Mr Oxberry, and providing due diligence which had been

requested at their meeting including TRG’s consolidated financial statements

and an investor presentation dated October 2015 which clarified the nature

of its investment proposals. The Managing Director of FRPS was also copied

to this email, in which the COO of TRG stated, “I am sure the [Managing

Director of FRPS] will be back in due course to discuss how we get underway

in respect of the TVAS process. There is a clear desire to work with you if we

can get the pricing right for both parties”. The COO of TRG then sent to Mr

Douglas another email on the same day, copying in Mr Oxberry, with valuation

reports for four hotel resorts in Cape Verde “as promised”. These documents

were received at the time when SMP was discussing with FRPS the creation

of the Pension Transfer Model;

(c)
on 26 October 2015, Mr Douglas emailed the Managing Director of TRG,

copying Mr Oxberry, stating, “Good to meet you […] There’s no rush at all as

we’re concentrating on sorting the TVAS advice route through [the Overseas

Adviser Firm], but if you get the chance to send across some due diligence-

style information on TRG then we can read at our leisure!” The Managing

Director of TRG responded the same day, copying in Mr Oxberry, stating, “I

will send this through tomorrow without fail”;

(d)
on 30 October 2015, a staff member of FRPS emailed a staff member of SMP,

copying Mr Oxberry, Mr Douglas and the Managing Director of FRPS, stating,

“Further to my conversation with Frank today, could you confirm Frank and

Adrian Douglas’s availability in November so we can organise a meeting with

[the Managing Director of FRPS] and myself and [the Overseas Adviser

Firm]”;

(e)
SMP received the ACER Introducers Agreement signed on behalf of ACER and

dated 23 November 2015, to be executed by Mr Oxberry or Mr Cuthbert on

behalf of SMP, in which FRPS and TRG were referred to together as “3rd Party

Introducer 1: FRPS / The Resort Group”. This agreement provided that SMP

would pay to ACER £200 or £250 for each client introduced to SMP via these

entities. It also provided that ACER would introduce other third-party

introducers to SMP (having already introduced FRPS to SMP in October 2015).

Mr Douglas negotiated and drafted the ACER Introducers Agreement and sent

a subsequent draft of this agreement to Mr Oxberry by email on 18 January

2016. Mr Oxberry, on behalf of SMP, ultimately signed the FRPS Introducers

Agreement on 1 April 2016, which provided that SMP would receive from FRPS

£795 for every client referral for which SMP advised;


(f)
in an email of 17 February 2016 to Mr Douglas and Mr Oxberry, Mr Welsh

requested that the appendix of the ACER Introducers Agreement be updated

before they signed it to include the “following introductions that [they] have

now made”, including TRG, FRPS and the Overseas Adviser Firm in close

proximity with each other (amongst other entities).

4.20.
Notwithstanding these clear indications which he received of the connections and

shared financial interests of FRPS and the Overseas Adviser Firm in promoting

TRG’s investments, Mr Oxberry failed to address the risks that the Pension Transfer

Model would be used to bring about investment of SMP clients’ pension funds into

investments offered by TRG and that these investments were unlikely to be

suitable for SMP’s clients.

SMP’s Pension Transfer Model as compared with the Full Advice and Two-

The Full Advice Model


4.21.
During the Relevant Period, Mr Douglas and Mr Martin provided advice on Defined

Benefit Pension Scheme transfers to clients using the Full Advice Model. The Full

Advice Model differed from SMP’s Pension Transfer Model and operated as follows:

(a)
a range of information would be gathered from the client by an adviser,

including information about the client’s financial goals and circumstances,

their attitude to risk and their capacity for loss;

(b)
a letter and report would be sent to the client and a meeting arranged to

discuss these findings. A TVAS Report would set out, amongst other things, a

comparison relating to specific benefits (for example, death benefits) and a

critical yield calculation. The critical yield offers guidance based on set

assumptions (expressed as a percentage) on the level of return the client’s

proposed onward investment will need to achieve, up to the point they start

drawing from the pension, to match the benefits they would receive from their

Defined Benefit Pension Scheme. The timing from the initial client contact

through to the provision of the TVAS Report would usually take three to four

weeks;

(c)
the adviser would also advise on the onward investment product into which

the client’s Defined Benefit Pension Scheme funds would be released. To

advise the client, the adviser would compare the client’s ceding scheme

against the proposed onward investment. This would provide the client with

a clear understanding of their existing benefits and their projected

entitlements if they were to transfer their pension. The adviser would assess

the suitability of the proposed transfer in light of the client’s circumstances,

objectives and risk tolerance; and

(d)
if the adviser’s personal recommendation was for a client to proceed with a

Pension Transfer, SMP would provide a confirmation of advice letter to the

trustee of the client’s occupational pension scheme, authorising the trustee

to release and transfer the client’s funds.

4.22.
In summary, the Full Advice Model consisted of a single adviser giving two

separate pieces of advice: (1) whether clients should give up their safeguarded

Defined Benefit Pension Scheme; and (2) how their pension funds should be

invested, should the Pension Transfer proceed. It was critical that the advice given

covered both parts of the Pension Transfer, which cannot be advised on in

isolation. This is because, in order to determine the suitability of a Pension

Transfer, the adviser must assess the proposed investment against the projected

performance of the ceding scheme and consider whether that proposed investment

is suitable in accordance with the client’s circumstances and attitude to risk.

4.23.
At SMP, each Full Advice Model case took several months from initial contact to

completion with the transfer of funds. Instead of earning a flat fee (as for advice

under the Pension Transfer Model), SMP would charge the client its normal rates

which would be significantly greater. In some cases, clients who were referred for

advice under the Pension Transfer Model were switched to the Full Advice Model.

No criticism of the Full Advice Model as operated by the Firm is made by the

Authority.

The Two-Adviser Model

4.24.
In contrast, a Two-Adviser Model differs in that one firm provides defined benefit

transfer advice (paragraphs 4.21(a), (b) and (d) above) and another firm provides

investment advice on the proposed onward investment (paragraph 4.21(c)

above), if the Pension Transfer were to proceed.


4.25.
It is common for clients who use a Two-Adviser Model to have the process of their

Pension Transfers managed by introducers who manage the client’s end-to-end

journey on the client’s behalf. Using this model, the introducers can organise two

separate advisers to provide advice on the separate parts of the client’s Pension

Transfer.

4.26.
However, the Two-Adviser Model introduces additional risks over the Full Advice

Model because the Pension Transfer advisers may have limited oversight over how

onward investment advice is provided to the client, meaning clients may not

receive complete advice on all the necessary aspects of the transfer. These risks

need to be appropriately managed by the Pension Transfer advisers.

4.27.
SMP’s Pension Transfer Model was more akin to the Two-Adviser Model, in that

SMP only advised on the Pension Transfer out of the ceding scheme and did not

advise on aspects relating to the onward investment of the pension funds.

4.28.
Mr Oxberry permitted SMP’s Pension Transfer Model to operate during the Relevant

Period notwithstanding its significant and clear deficiencies, which are set out at

paragraphs 4.29 to 4.49 below.

Limited information obtained from clients


4.29.
Under SMP’s Pension Transfer Model, SMP’s advisers sought very limited

information from clients. The extent of the information provided was limited to the

client’s contact information and general information regarding their ceding

scheme. This information was commonly provided by introducers and not directly

by the clients themselves. Further, SMP’s advisers did not meet any of the clients

advised through the Pension Transfer Model and the Firm’s primary point of contact

was introducers, rather than clients themselves. On the occasions where SMP’s

advisers conversed with clients directly, this was on an ad hoc basis to address

client queries and was not to receive the client’s full financial or personal

circumstances, with a view to providing complete transfer advice.

4.30.
According to Mr Douglas and Mr Martin, it was the expectation of SMP’s Pension

Transfer Specialists and compliance function that the full client information

gathering exercise, and the provision of full advice by a third-party financial

adviser such as the Overseas Adviser Firm, would take place after SMP’s initial

involvement of providing an advice letter based on a TVAS Report (see paragraph

4.18).

4.31.
When the relevant client’s details were required, in order to generate an accurate

TVAS Report and consequently issue a Personal Recommendation, much of the

inputted information was assumed to be correct by Mr Douglas and Mr Martin

without further enquiry (including the client’s employment status and estimated

retirement age).

4.32.
The Authority assessed a sample of 21 advice files of clients who were advised by

SMP under the Pension Transfer Model during the Relevant Period. The Authority

found that all 21 advice files were non-compliant with relevant regulatory

requirements because of material information gaps in the collection of client

information. Due to these material information gaps, the Authority was unable to

assess the suitability of the transfer advice given by SMP. In particular, SMP’s

advisers failed to gather:

(a)
information on the client’s knowledge and experience relevant to the specific

investment, as required by COBS 9.2.1R(2)(a) and 9.2.3R;

(b)
information on the client’s financial situation, including information on the

source and extent of their regular income, their assets and regular financial

commitments, as required by COBS 9.2.1R(2)(b) and 9.2.2R(3); and

(c)
information about the client’s investment objectives, including their

preferences regarding risk taking and their risk profile, as required by COBS

Use of a model portfolio within the TVAS Report


4.33.
During the Relevant Period, COBS 19.1.2R(1) required that a firm preparing and

providing a transfer analysis had to compare the benefits likely (on reasonable

assumptions) to be paid under a Defined Benefit Pension Scheme with the benefits

afforded by a personal pension scheme, stakeholder pension scheme or other

pension scheme with flexible benefits, before advising a retail client to transfer out

of a Defined Benefit Pension Scheme. COBS 19.1.3G(1) required that this

comparison should take into account all of the client’s relevant circumstances, and

COBS 19.1.3G(4) required that this comparison should be illustrated on rates of

return which take into account the likely expected returns of the assets in which

the retail client's funds would be invested.

4.34.
However, since SMP did not receive from the introducer for the purposes of the

TVAS any information regarding the onward investment or the likely expected

returns of the assets into which the client’s funds would be invested, each client’s

TVAS Report had to be generated based on limited information.

4.35.
Instead, when client TVAS Reports were produced, the advisers made assumptions

for each client that they would be investing into a generic personal pension

scheme. The TVAS calculation for all clients advised under the Pension Transfer

Model was therefore entirely unreliable, in failing, amongst other things, to account

for the reality of the proposed onward investment.

Personal Recommendation to transfer based solely on TVAS calculation


4.36.
COBS 9.2.1R required that when making a Personal Recommendation, an

authorised firm must obtain necessary information regarding the client's

knowledge and experience relevant to the specific investment, financial situation

and investment objectives. Instead, SMP, through its advisers, based its client

advice solely on a TVAS Report and a critical yield calculation. This placed its clients

at risk because it issued Personal Recommendations and facilitated Pension

Transfers without fully considering the client’s circumstances or suitability.

4.37.
SMP’s template advice letter included a statement that the recommendation

provided within the advice letter considered “the critical yield in isolation” and that

its recommendation “does not take into account […] personal circumstances or

attitude to risk and objectives”.

4.38.
Further, if SMP’s TVAS Report generated a critical yield above a certain threshold

(initially 7.5%, and later 6%), SMP would not recommend the client to transfer

out of their current scheme. Therefore, this percentage threshold was not a figure

individually applied to each client’s circumstances in accordance with, for example,

their individual attitudes to investment risk.

Confirmation of advice letter issued to the ceding scheme trustee


4.39.
Following the generation of a TVAS Report, SMP issued confirmation of advice

letters which were addressed to the ceding scheme trustee. These letters were

provided to the client’s introducers and would be forwarded to the ceding scheme

trustee as the basis of the authority to transfer the client’s pension funds.

4.40.
The template confirmation of advice letters issued by SMP contained the following

(a) SMP was “authorised and regulated by the Financial Conduct Authority, FCA

No 537804 […] to carry on the regulated activity in 53E [sic] of the Regulated

Activities Order” to advise on Pension Transfers;

(b) confirmation that Mr Douglas or Mr Martin held “the appropriate permission

under Part 4A of the Financial Services and Markets Act 2000 […] to carry on

the regulated activity (advising on conversion or transfer of pension benefits)

in Article 53E of the FCA Regulated Activities Order”;

(c) confirmation that Mr Douglas or Mr Martin had advised the client, with the

following templated statement: “I, [Adrian Douglas/ Liam Martin] can confirm

that I have given advice solely in relation to a Transfer Valuation Advice

Report in respect of [the client’s] benefits in [the client’s Defined Benefit

Pension Scheme]”; and

(d) depending on whether the client’s critical yield lay above or below SMP’s

critical yield threshold (see paragraph 4.38), a recommendation regarding

whether the client should transfer their pension benefits with the statement

of either:

(i)
“Based on the TVAS only we do not recommend that [the client]

transfers their pension benefits away from [the client’s Defined Benefit

Pension Scheme]”; or

(ii)
“Taking the critical yield in isolation […] we would normally recommend

that [the client] considers transferring their pension benefits away from

[the client’s Defined Benefit Pension Scheme].”

4.41.
SMP’s template confirmation of advice letters were also issued with a declaration

that the client was advised solely on the basis of a critical yield analysis and that

the Firm’s advice “does not take into account the client’s personal circumstances,

attitude to risk and objectives”. Further, the letters contained a caveat that the

adviser did not give advice regarding the receiving investment scheme. For the

purposes of the trustees’ legal position for releasing members from their schemes,

it was immaterial as to whether SMP had advised the client whether to transfer

out of their Defined Benefit Pension Scheme or not.

4.42.
Despite the caveats in these confirmation of advice letters, these letters from SMP,

an authorised independent adviser, provided the statutory basis upon which ceding

scheme trustees were able to release clients’ funds from their Defined Benefit

Pension Schemes. It was not necessary for the purposes of section 48 of the 2015

Act for trustees to have sight of the underlying advice given by the adviser once

written confirmation of advice was received in the form prescribed by Regulation

7 of the 2015 Regulations, confirming that advice had been provided by an

authorised independent adviser with permission to advise on Pension Transfers.

Trustees were not responsible for verifying the adequacy of the advice obtained

by clients and relied on the authorised independent adviser to have discharged its

regulatory responsibilities to advise on Pension Transfers appropriately.

4.43.
SMP provided confirmation of advice letters for the vast majority of clients it

advised under the Pension Transfer Model (at least 484 out of 547 clients),

including those clients whom the Firm had advised should not proceed with a

Pension Transfer. This included clients whom the Compliance Manager described

as being in the category of “definitely never transfer”, such as those with critical

yield values of above 15%.

Misleading ‘Reasons to Transfer’ letters directed to clients who wished to proceed

with a Pension Transfer against advice

4.44.
Prior to April 2016, in cases where the critical yield was above the 7.5% or 6%

threshold and SMP’s advice was not to transfer, a confirmation of advice letter

would be provided if confirmation was obtained that the client still wanted to

transfer.

4.45.
From April 2016, SMP changed its internal processes to require clients who wished

to proceed with a Pension Transfer to complete a ‘Reasons to Transfer’ letter

confirming that they had not received full advice but still wished to proceed with a

Pension Transfer based on the TVAS Report and critical yield. This was a template

letter containing an empty box, which the client was expected to complete in their

own words and handwriting, giving the reason for their transfer.

4.46.
An example of SMP’s failure to place such clients in an informed position is the

case of Ms W, whose ’Reasons to Transfer’ letter provided her reasons for deciding

to transfer her fund and included a signed disclaimer stating:

"I can confirm, that although I have not received full advice, as

recommended in your letter, I still wish to go ahead based on the Transfer

Value Analysis Report and the critical yield required of 8.1%.

Please, therefore confirm to the trustees that I have received the required

level of advice in order for the funds to be released.

I understand that I will be losing all guarantees attached to my transferred

plan."

4.47.
Ms W’s file included no evidence that the Firm attempted to explain further the

risks associated with the transfer, such as the loss of all defined benefit

guarantees. The reason for transfer was purely based on the critical yield of 8.1%,

which, as set out above, fails to consider the client’s financial situation or

investment objectives, and applies an arbitrary critical yield threshold (of 6%),

which ignores the client’s investment risk tolerance.

4.48.
Further, the template letter was also misleading because of the following

statements: ”[…] although I have not received full advice […] I still wish to go

ahead based on the Transfer Value Analysis Report” and “[…] I have received the

required level of advice in order for the funds to be released.” SMP’s advisers

stated that the “full advice” was not provided by SMP, but the “full” and “required

level of advice” was received from the relevant financial adviser, such as the

Overseas Adviser Firm. However, the Authority considers that this communication

was misleading and failed to treat clients fairly, because it assumed that clients

understood the difference between SMP’s limited advice and the complete advice

they could have received under a Full Advice Model. The statements imply that:

(a) Ms W was placed in an informed position to understand SMP’s incorrect belief

that its critical yield analysis did not constitute full advice, but was

nonetheless sufficient to facilitate a Pension Transfer; and

(b) Ms W appreciated the difference between the limited advice she received from

SMP, and the more extensive advice she could have received under a Full

Advice Model, but nonetheless confirmed that SMP’s TVAS-only advice should

form the basis of her decision.

4.49.
No steps were taken to ensure clients fully understood the implications of the

‘Reasons to Transfer’ letter which, together with the confirmation of advice letter,

facilitated Pension Transfers from Defined Benefit Pension Schemes based on

limited advice. Therefore, SMP wrote to Ms W in an unclear and misleading way.

Such conduct placed clients at risk, because clients were exposed to SMP’s

seriously flawed advice process but were not given sufficient warning their pension

funds would be better safeguarded through receiving full and comprehensive

advice.

Operation of the Pension Transfer Model


Novelty of model and rate of expansion of SMP’s business


4.50.
Mr Oxberry was aware that the Pension Transfer Model was a novel advice process,

and that it represented a significant and rapid expansion in SMP’s business

operations. In particular:

(a) Mr Oxberry was aware that, prior to the Relevant Period, SMP conducted

advice solely using the Full Advice Model, where SMP’s advisers would obtain

directly from its clients information regarding the client’s financial situation

and objectives, attitude to transfer or investment risk and capacity for

financial loss (see paragraphs 4.21 to 4.22). Mr Oxberry was therefore aware

that the proposed Pension Transfer Model constituted a significant departure

from SMP’s usual advice model where there would be a detailed discussion of

the client’s circumstances;

(b) no proper due diligence or prior research was conducted on advice models

similar to the Pension Transfer Model before it was implemented by SMP;

(c) Mr Oxberry was aware that the Pension Transfer Model entailed a rapid

expansion of SMP’s business operations. Prior to the Pension Transfer Model’s

adoption, SMP’s advisers had advised approximately ten clients regarding

their Defined Benefit Pension Scheme transfers. Moreover, each Full Advice

Model case took several months to complete (see paragraph 4.23). Under the

Pension Transfer Model, however, the limited fact-find and accelerated

provision of advice allowed SMP to achieve a significant volume of transfer

advice. At least 547 clients were advised in a 9 month period from November

2015 to July 2016, with at least 139 cases in April 2016, 76 cases in May

2016, and 137 cases in June 2016. Mr Oxberry was aware during the Relevant

Period of SMP’s significantly increased number of clients being advised. On

16 January 2016, Mr Douglas sent an email to Mr Oxberry concerning the

current and immediate pipeline of cases under the Pension Transfer Model,

such as his projections that the “short term promised pipeline” of cases would

be “20 – 25 per week / 80 – 100 per month”. Mr Douglas also commented,

“We have been offered significantly more but cannot take the business

currently”; and

(d)
SMP had not, prior to the Relevant Period, had any relationship with third-

party introducers and the introduction of at least 17 new introducers to the

Firm, via Mr Douglas and Mr Martin, represented a major change in direction

for SMP.

Failure to ensure SMP’s Compliance Consultant was consulted


4.51.
At no time during the establishment or operation of the Pension Transfer Model

was SMP’s Compliance Consultant approached by SMP to advise on the compliance

of the Pension Transfer Model. The Compliance Consultant was also not made

aware of the Pension Transfer Model during its regular audits or visits to SMP’s

offices (in November 2015 and January 2016).

4.52.
There is no evidence to show that Mr Oxberry sought or caused the Firm to seek

advice from the Compliance Consultant, or sought an expert second opinion, as to

whether the Pension Transfer Model was compliant, or that he took any action to

ensure that either of these steps was or had been taken. This was notwithstanding

the novelty of the model and the rate of expansion of SMP’s business that it

represented, of which Mr Oxberry was aware (see paragraph 4.50).

Failure to ensure that SMP conducted adequate due diligence on introducers


4.53.
Mr Oxberry was also aware that Mr Douglas and Mr Martin were advising a high

number of clients without first ensuring that satisfactory due diligence was

conducted on the relevant introducers. Mr Oxberry did not address the risks to

clients of partnering with a large number of unknown introducers because he

considered it to be the responsibility of Mr Cuthbert to ensure that adequate due

diligence was performed. Furthermore, he took no steps to ensure that satisfactory

due diligence was conducted on the relevant introducers and closed his mind to

the material risks to SMP’s clients that those unknown introducers would bring

about investments of clients’ pension funds into investments which were

unsuitable for them.

4.54.
SMP’s onboarding of introducers consisted of:


(a)
a high-level questionnaire which only requested basic information on the

introducer, namely its name and address, in addition to details on the type

of introduction it would be making to SMP, its projected figures for the

number of introductions it would make, and its fees. This questionnaire was

not completed for every introducer, nor was the questionnaire consistently

followed up on and no central record of introducers was kept;

(b)
a generic introducer agreement to be entered into between SMP and the

introducer. However, in certain instances the introducer agreement was

signed many months after Pension Transfers were finalised.

No additional due diligence was undertaken on introducers and no formal process

for carrying out meaningful due diligence was in place. The extent of due diligence

performed on introducers was wholly inadequate for the purposes of safeguarding

clients. SMP’s Compliance Consultant reached the conclusion, in September 2016,

that “it [was] unclear if due diligence has been completed on any of the

introducers.”

4.55.
Moreover, Mr Oxberry did not challenge Mr Cuthbert, Mr Douglas or Mr Martin on

whether it was appropriate for Mr Welsh to introduce additional introducers to SMP

(in circumstances where SMP was unfamiliar with partnering with introducers

which necessitated the exercise of greater care and due diligence). At the time of

ACER’s introduction of FRPS to SMP, Mr Welsh had been subject to a Determination

Notice given (but not published) by The Pensions Regulator, which found that Mr

Welsh was the trustee of an Occupational Pension Scheme in which the underlying

investments were found to be high risk and illiquid and considered by an

independent review to be promising implausibly high returns, including

investments in TRG which were described as being in a class of investments which

had been highlighted by Action Fraud as “potentially fraudulent”. The Authority

has seen no evidence that Mr Oxberry was aware of the Determination Notice and

Mr Oxberry has stated that he was not aware of The Pensions Regulator’s Final

Notice (which was published on 8 February 2016) and the associated risks for

SMP’s business of partnering with Mr Welsh.

Warning signs in respect of the clear deficiencies and risks of the Pension Transfer

4.56.
During the operation of the Pension Transfer Model, Mr Oxberry was presented

with a number of warning signs in respect of the clear deficiencies of the model

and the risks of detriment it posed to SMP’s clients. In particular:

(a) On 1 April 2016, Mr Oxberry was notified by the Compliance Manager that an

introducer had written directly to a ceding scheme trustee using a Letter of

Authority drafted by the introducer which purported to be SMP’s Letter of

Authority. Mr Oxberry responded that this was “unacceptable” and demanded

answers from Mr Douglas and Mr Martin. However, this did not lead Mr

Oxberry to question the suitability of SMP’s partner introducers or their

continuing involvement, nor did it lead to a wider review of SMP’s relationship

with third-party introducers or SMP’s controls;

(b) on 11 April 2016, the Compliance Manager expressed to Mr Oxberry his

distrust of SMP’s partner introducers, including FRPS. As a result of this

distrust, the Compliance Manager changed SMP’s processes in May 2016 to

ensure clients received a copy of SMP’s advice letter directly from SMP, rather

than via the introducer. Despite knowing that the Firm’s Compliance Manager

did not trust FRPS, Mr Oxberry did not cause to be carried out a wider review

of SMP’s relationship with third-party introducers or of SMP’s controls to

protect clients, and SMP therefore continued to facilitate Pension Transfers on

the basis of its very limited advice; and

(c)
on 13 May 2016, SMP’s Compliance Manager warned Mr Oxberry that FRPS,

which constituted a “fair proportion” of SMP’s fee income, appeared to be

using an offshore trustee for their clients. The Compliance Manager warned

that this offshore trustee only ran QROPS from overseas locations, which

suggested clients were being led by FRPS to invest into overseas, unregulated

and potentially high-risk investment schemes. This built on the clear

indications which Mr Oxberry had previously received during the design

stages of the Pension Transfer Model of the connections between FRPS and

TRG (see paragraph 4.19). However, despite these warnings, Mr Oxberry

failed to instruct a meaningful response, such as undertaking comprehensive

due diligence on the investments promoted by introducers and an assessment

of whether they were appropriate destinations for clients’ pension funds. As

a result, Mr Oxberry failed to address the risk that FRPS would continue to

invest clients’ pensions funds into overseas investments which were unlikely

to be suitable for them, such as TRG.

Mr Oxberry had the authority at SMP to question or terminate SMP’s relationship

with third-party introducers, but he did not do so notwithstanding the warning

signs referred to above, and he failed to bring the Pension Transfer Model to an

end at an earlier point before the end of the Relevant Period.

4.57.
These were clear warning signs that SMP’s clients were being exposed to a

significant risk of detriment arising from the practices of introducers. The rate of

clients advised under the Pension Transfer Model continued to increase (see

paragraph 4.50), together with the fees generated from the Pension Transfer

Model. Mr Oxberry was incentivised by these increased revenues to allow the

Pension Transfer Model to continue to operate:

(a) between November 2015 and March 2016, SMP retained the benefit of

£25,597 of the fees arising from the Pension Transfer Model (following

payment of 70% commission to Mr Douglas and Mr Martin’s jointly owned

company), of which Mr Oxberry was entitled to receive £16,638; and

(b) between April 2016 and July 2016, SMP retained the benefit of £113,532 of

the fees (following payment of 70% commission to Mr Douglas and Mr

Martin’s jointly owned company), of which Mr Oxberry was entitled to receive

£73,795.


Failure to ensure the effectiveness of Compliance


4.58.
Mr Oxberry did not, as one of two CF4 Partners at SMP, oversee the work of Mr

Douglas and Mr Martin adequately. Mr Oxberry sought to devolve his entire

responsibility for this to Mr Cuthbert and, in his absence, the Compliance Manager.

4.59.
The Pension Transfer Model operated on a high-volume basis, using administrative

staff to assist with highly templated work without sufficient consideration of

individual client needs. For instance, approximately 42% of TVAS Reports were

found to have been provided by SMP’s administrative staff or paraplanners, and

not SMP’s more experienced and approved CF30 (Customer) advisers, but which

were claimed to have been checked by SMP’s CF30 (Customer) advisers. For

example, in repeated instances, a single-life critical yield value was applied instead

of a joint-life critical yield suitable for married clients, resulting in SMP erroneously

advising clients to proceed with Pension Transfers. Mr Oxberry, in failing to oversee

the operation of the Pension Transfer Model, notwithstanding his awareness of the

significant expansion of the business and operational challenges that it

represented to SMP, closed his mind to the risk that clients would be exposed to

financial detriment.

4.60.
Moreover, the reduced effectiveness of SMP’s compliance function during the

Relevant Period to supervise the advice provided by Mr Douglas and Mr Martin

appropriately would have been clear to Mr Oxberry. This was in light of:

(a) Mr Cuthbert’s reduction in his office hours ahead of his planned retirement.

Mr Cuthbert was largely absent from SMP’s offices, sometimes not coming in

for some weeks, although he was contactable by telephone. SMP’s

Compliance Manager, who reported to Mr Cuthbert, was therefore expected

to handle the day-to-day compliance work at the Firm;

(b) the Compliance Manager’s inexperience and lack of relevant qualification for

overseeing Pension Transfer advice and the fact that, unlike Mr Cuthbert, he

was not a qualified Pension Transfer Specialist; and

(c) the close proximity in which Mr Oxberry worked with the compliance function

at SMP’s offices (see paragraph 4.6).

Taking into account the factors set out above, it is the Authority’s view that it was

not open to Mr Oxberry to abrogate his responsibility as a CF4 and one of the only

two partners in SMP with respect to the proper functioning of SMP’s compliance

function.

5.
FAILINGS

5.1.
The statutory and regulatory provisions relevant to this Notice are referred to in

5.2.
By reason of the facts and matters set out above, Mr Oxberry breached Statement

of Principle 1.

5.3.
The Authority considers that during the Relevant Period, Mr Oxberry acted

recklessly and thereby failed to act with integrity in carrying out his accountable

functions at SMP as CF4 (Partner), in breach of Statement of Principle 1. Mr

Oxberry closed his mind to the clear risks arising in relation to SMP’s design and

operation of the Pension Transfer Model and failed to take appropriate action in

light of them. In particular, Mr Oxberry recklessly:

(a) failed to address the significant risk that clients introduced to SMP via FRPS

for the purpose of receiving advice under the Pension Transfer Model would

be encouraged to transfer out of their Defined Benefit Pension Schemes and

invest into high-risk, illiquid and unregulated property investments offered by

TRG which were unlikely to be suitable for them. This was notwithstanding

the clear indications he received that FRPS, TRG and the Overseas Adviser

Firm were connected entities with a shared financial interest in promoting

TRG’s high-risk property investments. The Authority considers that Mr

Oxberry was the responsible Partner at SMP for the Firm’s relationship with

FRPS, in participating in discussions with FRPS, which were not attended by

Mr Cuthbert, and being copied into key correspondence with FRPS and TRG

during the design stage of the Pension Transfer Model. Mr Oxberry also

ultimately signed the FRPS Introducers Agreement between SMP and FRPS in

April 2016. In permitting SMP to operate the Pension Transfer Model with

FRPS, Mr Oxberry closed his mind to the significant risk associated with the

Firm partnering with FRPS, and unreasonably exposed SMP’s clients to this

risk;

(b) failed to have regard to the clear deficiencies in the Pension Transfer Model

before permitting the expansion of SMP’s business model to include this

advice process, notwithstanding that it constituted a significant departure

from SMP’s usual advice model. Mr Oxberry closed his mind to the significant

risk that SMP’s clients would proceed with a Pension Transfer without

receiving complete advice. The clear deficiencies in the Pension Transfer

Model included that:

(i)
it failed to take into account the client’s attitude to risk, meaning SMP

was unable to ascertain whether a Pension Transfer was suitable in

accordance with the client’s risk tolerance;

(ii)
it failed to gather information on the client’s financial situation and

income needs throughout retirement, meaning SMP was unable to

determine whether a client could bear the risks of losing the guaranteed

income they would otherwise receive during their retirement from their

Defined Benefit Pension Scheme;

(iii)
it failed to gather information on the client’s knowledge and experience

of relevant investments, meaning SMP was unable to assess whether its

clients fully understood the financial implications of its advice;

(iv)
Personal Recommendations were provided to clients on the basis of very

limited information gathered from the client and solely on the basis of a

TVAS Report;

(v) the TVAS Report took no account of the onward investment scheme and

instead used a generic personal pension scheme; and

(vi)
confirmation of advice letters were issued to the trustees of the ceding

schemes at a point when SMP’s clients had received this very limited

advice, thereby enabling Pension Transfers.

In closing his mind to and failing to assess these clear deficiencies in the

Pension Transfer Model, Mr Oxberry unreasonably exposed the SMP’s clients

to a significant risk that their pension funds would be transferred out of their

Defined Benefit Pension Schemes into investments which were unsuitable for

them;

(c) failed to take reasonable steps to ensure that SMP performed sufficient due

diligence on its partner introducers and the investments which they promoted

to clients, notwithstanding that Mr Oxberry was responsible for business

development at SMP. The Pension Transfer Model entailed a rapid expansion

of SMP’s business operations, with the Firm partnering with numerous

introducers to receive and advise significantly greater numbers of clients,

therefore placing a significant number of clients at greater risk. SMP did not

historically have any relationship with third-party introducers and the

introduction of at least 17 introducers to the Firm represented a major change

in direction regarding the methods in which clients would be introduced to

SMP. Mr Oxberry closed his mind to the risks that would arise from rapidly

expanding SMP’s business operations to advise clients introduced by unknown

introducers using the Pension Transfer Model;

(d) Mr Oxberry failed to seek advice from the Compliance Consultant, or an expert

second opinion, as to whether the Pension Transfer Model was compliant, or

failed to ensure that these steps were or had been taken, both prior to its

implementation and during its operation. This was despite there being two

visits by SMP’s Compliance Consultant to SMP during the Relevant Period, in

November 2015 and January 2016, when Mr Oxberry could have checked

whether the Pension Transfer Model was compliant with relevant regulatory

requirements. In failing to seek advice from the Compliance Consultant, or

an expert second opinion, or failing to ensure that these steps were or had

been taken, Mr Oxberry closed his mind to the significant risks associated

with the Pension Transfer Model;

(e) failed to take reasonable steps to ensure the effectiveness of SMP’s

compliance function. The reduced effectiveness of SMP’s compliance function

must have been clear to Mr Oxberry as one of only two CF4 Partners at SMP.

The Authority considers that Mr Oxberry should have exercised a greater

degree of scrutiny over the effectiveness of SMP’s compliance function,

especially in circumstances where the compliance function was tasked with

verifying a high-risk and novel advice process which constituted a significant

departure from SMP’s usual advice model, and a rapid expansion of SMP’s

business operations. However, Mr Oxberry failed to exercise any such

oversight, and permitted the Pension Transfer Model to operate until the end

of the Relevant Period. In doing so, he closed his mind to the risk that the

advice received by clients was not compliant with the relevant requirements

in COBS; and

(f) failed to respond adequately to a variety of warning signs (referred to in

paragraphs 4.56 and 4.57) he received during the operation of the Pension

Transfer Model in respect of the clear deficiencies of the advice process and,

in doing so, closed his mind to the clear risks of detriment it posed to SMP’s

clients. Mr Oxberry took no reasonable steps to rectify potential issues;

instead, he permitted the model to keep operating until the end of the

Relevant Period, during which time the numbers of clients advised under the

model (which he was aware of), and the corresponding fees generated from

them (from which Mr Oxberry derived financial benefit) substantially

increased up the end of the Relevant Period.

6.
SANCTION

6.1.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of

DEPP. DEPP 6.5B sets out the details of the five-step framework that applies in

respect of financial penalties imposed on individuals in non-market abuse cases.

Step 1: disgorgement

6.2.
Pursuant to DEPP 6.5B.1G, at Step 1 the Authority seeks to deprive an individual

of the financial benefit derived directly from the breach where it is practicable to

quantify this.

6.3.
Mr Oxberry derived direct financial benefit from the fees generated by the Pension

Transfer Model. SMP received £463,766 from its partner introducers during the

Relevant Period in connection with the Pension Transfer Model, of which it retained

30% (£139,129) following a 70% pay-away to a company jointly owned by Mr

Douglas and Mr Martin. Of this sum of £139,129, the Authority considers that Mr

Oxberry directly received the benefit of £90,433 further to an agreement with Mr

Cuthbert that he would be entitled to a greater share of the profits of the

partnership, and that this benefit stemmed directly from his breach.

6.4.
The Authority has charged interest on Mr Oxberry’s benefits at 8% per year from

the end of the Relevant Period to the date of this Notice, amounting to £55,236.

6.5.
Step 1 is therefore £145,669.

Step 2: the seriousness of the breach

6.6.
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that

reflects the seriousness of the breach. That figure is based on a percentage of the

individual’s relevant income. The individual’s relevant income is the gross amount

of all benefits received by the individual from the employment in connection with

which the breach occurred, and for the period of the breach.

6.7.
The period of Mr Oxberry’s breach of Statement of Principle 1 was from 1 October

2015 to 31 July 2016. Pursuant to DEPP 6.5B.2G(2), in cases where the breach

lasted less than 12 months, the relevant income will be that earned by the

individual in the 12 months preceding the end of the breach. The Authority

considers Mr Oxberry’s relevant income for the 12 month period preceding 31 July

2016 to be £291,586.

6.8.
In deciding on the percentage of the relevant income that forms the basis of the

Step 2 figure, the Authority considers the seriousness of the breach and selects a

percentage between 0% and 40%. This range is divided into five fixed levels which

represent, on a sliding scale, the seriousness of the breach; the more serious the

breach, the higher the level. For penalties imposed on individuals in non-market

abuse cases there are the following five levels:

Level 1 – 0%

Level 2 – 10%

Level 3 – 20%

Level 4 – 30%

Level 5 – 40%

6.9.
In assessing the seriousness level, the Authority takes into account various factors

which reflect the impact and nature of the breach, and whether it was committed

deliberately or recklessly. DEPP 6.5B.2G(12) lists factors likely to be considered

‘level 4 or 5 factors’. Of these, the Authority considers the following factors to be

relevant.

Impact of the breach

6.10.
DEPP 6.5B.2.2G(8) lists factors relating to the impact of a breach committed by

an individual.

6.11.
Mr Oxberry substantially benefitted from the breach (DEPP 6.5B.2G(8)(a)).

6.12.
Mr Oxberry’s breach also caused a significant risk of loss to a very large number

of consumers who transferred out of their Defined Benefit Pension Schemes (DEPP

6.5B.2G(8)(c)).

6.13.
Mr Oxberry’s breach caused inconvenience and potential distress to pension

holders who transferred out of their Defined Benefit Pension Schemes (DEPP

6.5B.2G(8)(e)).

Nature of the breach

6.14.
DEPP 6.5B.2.2G(9) lists factors relating to the nature of a breach committed by

an individual.

6.15.
Mr Oxberry’s failings occurred over a sustained period (ten months) (DEPP

6.5B.2G(9)(b)).

6.16.
Mr Oxberry failed to act with integrity because he acted recklessly throughout the

Relevant Period (6.5B.2G(9)(e)).

6.17.
Mr Oxberry, as an individual approved to perform the CF4 (Partner) controlled

function, held a senior position in the Firm as one of its two partners (DEPP

6.5B.2G(9)(k)) and was an experienced industry professional.

Whether the breach was deliberate and/or reckless

6.18.
DEPP 6.5B.2G(10) and (11) list factors tending to show whether the breach was

deliberate or reckless. The Authority considers that the factors tending to show

the breach was reckless are present in this case (DEPP 6.5B.2G(11)).

Level of seriousness

6.19.
DEPP 6.5B.2G(12) lists factors lists factors likely to be considered ‘level 4 or 5

factors’. Of these, the Authority considers the following factors to be relevant:

(1) Mr Oxberry’s breach caused a significant loss or risk of loss to individual

consumers, investors or other market users (DEPP 6.5B.2G(12)(a));

(2) Mr Oxberry failed to act with integrity (DEPP 6.5B.2G(12)(d)); and


(3) Mr Oxberry committed the breach recklessly (DEPP 6.5B.2G(12)(g).

6.20.
DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 and 3 factors’.

The Authority considers that none of these apply.

6.21.
Taking all of these factors into account, the Authority considers the seriousness

of the breach to be level 4 and so the Step 2 figure is 30% of £291,586.

6.22.
Step 2 is therefore £87,475.


Step 3: mitigating and aggravating factors


6.23.
Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the

amount of the financial penalty arrived at after Step 2, but not including any

amount to be disgorged as set out in Step 1, to take into account factors which

aggravate or mitigate the breach.

6.24.
The Authority considers that the following factors aggravate the breach:

(1)
on 18 January 2013 and 28 April 2014, the Authority issued alerts to firms

advising on Pension Transfers with a view to investing pension monies into

unregulated products through investment wrappers. These clearly related

to the advice the Firm under Mr Oxberry was providing and were intended

to prevent precisely the type of consumer detriment which occurred in this

case. Mr Oxberry’s conduct took place after the Authority’s two alerts (DEPP

6.5B.3G(2)(k)); and

(2)
in April 2015 and March 2016, the Authority sent copies of the alerts

referred to above to SMP and highlighted the Authority’s concerns.

Notwithstanding that the Authority had publicly called for an improvement

in standards in relation to the behaviour constituting the breach or similar

behaviour, and provided these alerts to the Firm, Mr Oxberry failed to cease

its operation (DEPP 6.5B.3G(2)(a)).

6.25.
The Authority considers that there are no factors that mitigate the breach.

6.26.
Having taken into account these aggravating factors, the Authority considers that

the Step 2 figure should be increased by 10%.

6.27.
Step 3 is therefore £96,222.

Step 4: adjustment for deterrence

6.28.
Pursuant to DEPP 6.5B.4G, if the Authority considers the figure arrived at after

Step 3 is insufficient to deter the individual who committed the breach, or others,

from committing further or similar breaches, then the Authority may increase the

penalty.

6.29.
The Authority considers that the Step 3 figure of £96,222 represents a sufficient

deterrent to Mr Oxberry and others, and so has not increased the penalty at Step

4.

6.30.
Step 4 is therefore £96,222.

Step 5: settlement discount

6.31.
Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty

is to be imposed agree the amount of the financial penalty and other terms, DEPP

6.7 provides that the amount of the financial penalty which might otherwise have

been payable will be reduced to reflect the stage at which the Authority and the

individual reached agreement. The settlement discount does not apply to the

disgorgement of any benefit calculated at Step 1.

6.32.
No settlement discount applies. Step 5 is therefore £96,222. In accordance with

the Authority’s usual practice this is to be rounded down to £96,200.

6.33.
The Authority has therefore decided to impose a total financial penalty of

£241,869 (the Step 1 and Step 5 figures added together) on Mr Oxberry for

breaching Statement of Principle 1.

Prohibition Order and Withdrawal of Approval

6.34.
The Authority has the power to prohibit individuals under section 56 of the 2000

Act and to withdraw an approval given by the Authority in relation to the

performance by a person of a function under section 63 of the 2000 Act. The

Authority has had regard to the guidance in Chapter 9 of EG and FIT 2 of the

Handbook, including the criteria at EG 9.3.2 and FIT 2.1.3, in considering whether

to impose a prohibition order on Mr Oxberry, and whether to withdraw his

approval in relation to his performance of the SMF27 (Partner) function at SMP.

6.35.
In considering whether to impose a prohibition order, the Authority has had regard

to all relevant circumstances of the case. In particular, in relation to EG 9.3.2 and

FIT 2.1.3, the Authority has considered Mr Oxberry’s fitness and propriety, his

reckless and knowing misconduct displaying a lack of integrity and disregard for

customers’ interests and the regulatory system, and the severity of the risk which

Mr Oxberry poses to consumers and to confidence in the financial system.

6.36.
The Authority considers that it is appropriate and proportionate in all the

circumstances to withdraw Mr Oxberry’s approval in relation to his performance

of the SMF27 (Partner) function at SMP, and also to prohibit Mr Oxberry from

performing any function in relation to any regulated activity carried on by an

authorised person, exempt person or exempt professional firm, on the grounds

that his conduct during the Relevant Period demonstrates a reckless lack of

integrity.

7.
REPRESENTATIONS


7.1.
Annex B contains a brief summary of the key representations made by Mr Oxberry

and by the third parties who chose to make representations, namely the Resort

Group Plc and Mr Welsh, in response to the Warning Notice and how they have

been dealt with. In making the decision which gave rise to the obligation to give

this Notice, the Authority has taken account of all of the representations made by

Mr Oxberry and by the third parties, the Resort Group Plc and Mr Welsh, whether

or not set out in Annex B.

8.
PROCEDURAL MATTERS


8.1.
This Notice is given to Mr Oxberry under sections 57, 63 and 67 and in accordance

with section 388 of the 2000 Act.

8.2.
This Notice is given to SMP as an interested party pursuant to section 63(3) of the

2000 Act.

Decision maker

8.3.
The decision which gave rise to the obligation to give this Notice was made by the

RDC. The RDC is a committee of the Authority which takes certain decisions on

behalf of the Authority. The members of the RDC are separate to the Authority

staff involved in conducting investigations and recommending action against firms

and individuals. Further information about the RDC can be found on the Authority’s

The Tribunal

8.4.
Mr Oxberry has the right to refer the matter to which this Notice relates to the

Tribunal. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper

Tribunal) Rules 2008, Mr Oxberry has 28 days from the date on which this Notice

is given to him to refer the matter to the Tribunal. A reference to the Tribunal is

made by way of a signed reference notice (Form FTC3) filed with a copy of this

Notice. The Tribunal’s contact details are: Upper Tribunal, Tax and Chancery

9730; email: fs@hmcts.gsi.gov.uk).

8.5.
Further information on the Tribunal, including guidance and the relevant forms to

complete, can be found on the HM Courts and Tribunal Service website:

8.6.
A copy of Form FTC3 must also be sent to the Authority at the same time as filing

a reference with the Tribunal. A copy should be sent to William Byrne at the

Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.

8.7.
Once any such referral is determined by the Tribunal and subject to that

determination, or if the matter has not been referred to the Tribunal, the Authority

will issue a final notice about the implementation of that decision.

Access to evidence

8.8.
Section 394 of the 2000 Act applies to this Notice.

8.9.
The person to whom this Notice is given has the right to access:

(1)
the material upon which the Authority has relied in deciding to give this

Notice; and

(2)
any secondary material which, in the opinion of the Authority, might

undermine that decision. There is no secondary material.

Third party rights

8.10.
A copy of this Notice is being given to the following persons as third parties

identified in the reasons above and to whom in the opinion of the Authority the

matter to which those reasons relate is prejudicial. Each of these parties have

similar rights of representation and access to material in relation to the matter

which identifies them:

(1) The Resort Group Plc;

(2) St Martin’s Partners;

(3) Alec Cuthbert;

(4) Matthew Welsh;

(5) The Chief Operating Officer of The Resort Group Plc;

(6) The Managing Director of The Resort Group Plc; and

(7) The Managing Director of First Review Pension Services Ltd.

Interested parties

8.11.
This Notice is being given to SMP as an interested party in the withdrawal of Mr

Oxberry’s approval in relation to his performance of the SMF27 Partner function at

SMP pursuant to section 63(3) of the 2000 Act. The rights of SMP to:

a)
have access to evidence pursuant to section 394 of the 2000 Act, as

described above; and

b)
refer to the Tribunal any decision to withdraw Mr Oxberry’s approval,

pursuant to section 63(5) of the 2000 Act

are limited to that action.

Confidentiality and publicity

8.12.
This Notice may contain confidential information and should not be disclosed to a

third party (except for the purpose of obtaining advice on its contents). In

accordance with section 391 of the Act, a person to whom this Notice is given or

copied may not publish the Notice or any details concerning it unless the Authority

has published the Notice or those details.

8.13.
However, the Authority must publish such information about the matter to which

a Decision Notice or Final Notice relates as it considers appropriate. The persons

to whom this Notice is given or copied should therefore be aware that the facts

and matters contained in this Notice may be made public.

Authority contacts

8.14.
For more information concerning this matter generally, contact William Byrne

(direct line: 020 7066 9821/email: william.byrne@fca.org.uk) at the Authority.

Chair, Regulatory Decisions Committee

ANNEX A


RELEVANT STATUTORY AND REGULATORY PROVISIONS


1.
RELEVANT STATUTORY PROVISIONS


The 2000 Act


1.1.
The Authority’s operational objectives, set out in section 1B(3) of the 2000 Act,

include the consumer protection objective of securing an appropriate degree of

protection for consumers (section 1C) and the integrity objective of protecting and

enhancing the integrity of the UK financial system (section 1D).

1.2.
Section 56 of the 2000 Act provides that the Authority may make an order

prohibiting an individual from performing a specified function, any function falling

within a specified description or any function, if it appears to the Authority that that

individual is not a fit and proper person to perform functions in relation to a

regulated activity carried on by an authorised person, exempt person or a person

to whom, as a result of Part 20, the general prohibition does not apply in relation

to that activity. Such an order may relate to a specified regulated activity, any

regulated activity falling within a specified description, or all regulated activities.

1.3.
Section 63 of the 2000 Act provides that the Authority may withdraw an approval

issued under section 59 if it considers that the person in respect of whom it was

given is not a fit and proper person to perform the function to which the approval

relates.

1.4.
Section 66 of the 2000 Act1 provides that the Authority may take action against a

person if it appears to the Authority that he is guilty of misconduct and the Authority

is satisfied that it is appropriate in all the circumstances to take action against him.

1.5.
During the Relevant Period, under section 66(2) of the 2000 Act (in force until 6

March 2016) misconduct included failure, while an approved person, to comply with

a Statement of Principle issued under section 64 of the 2000 Act or to have been

1 Section 66 was amended and section 66A added during the Relevant Period, but those changes are not

material to the manner in which the Authority has exercised its powers as set out in this Notice.

knowingly concerned in a contravention by the relevant authorised person of a

requirement imposed on that approved person by or under the 2000 Act.

1.6.
During the Relevant Period, under section 66A of the 2000 Act (in force from 7

March 2016) a person was guilty of misconduct if, inter alia, he at any time failed

to comply with rules made by the Authority under section 64A of the 2000 Act and

at that time was an approved person, or had been knowingly concerned in a

contravention of relevant requirement by an authorised person and at that time

the person was an approved person in relation to the authorised person.

The 2015 Act and the 2015 Regulations

1.7.
Section 48(1) of the 2015 Act provides that trustees or managers of a defined

benefit pension scheme are, and were during the Relevant Period, required to check

that a member of the scheme had received appropriate independent advice before,

amongst other things, making a transfer payment in respect of any of the benefit

with a view to acquiring a right or entitlement to flexible benefits for the member

under another pension scheme.

1.8.
Section 48(8) of the 2015 Act provides that “appropriate independent advice”

means advice that is given by an authorised independent adviser and meets any

other requirement specified in regulations made by the Secretary of State.

Regulation 3 of the 2015 Regulations provides that the advice must be specific to

the type of relevant transaction proposed by the member.

1.9.
Section 48(8) of the 2015 Act provides that “authorised independent adviser”

means a person who has permission under Part 4A of the 2000 Act, or resulting

from any other provision of the 2000 Act, to carry on a regulated activity specified

in regulations made by the Secretary of State and meets such other requirements

as may be specified in regulations made by the Secretary of State for the purpose

of ensuring that the person is independent. Regulation 4 of the 2015 Regulations

provides that the specified regulated activity is the activity described in article 53E

of the 2001 Order, which is the activity of advising on the conversion or transfer of

pension benefits.

1.10. Section 48(3) of the 2015 Act provides that the Secretary of State may by

regulations create an exception to section 48(1) in the case of a member or survivor

whose subsisting rights in respect of safeguarded benefits under the scheme, or

safeguarded benefits under the scheme and any other schemes, are worth less

than a specified amount. Regulation 5 of the 2015 Regulations provides that the

trustee or members are not required to carry out the check required under section

48(1) of the 2015 Act if the total value of the member or survivor’s benefits under

a defined benefit pension scheme is £30,000 or less on the valuation date.

1.11. Regulation 7 of the 2015 Regulations provides that confirmation from the member

that appropriate independent advice has been received must be in the form of a

statement in writing from the authorised independent adviser providing the advice

confirming:

(a) that advice has been provided which is specific to the type of transaction

proposed by the member;

(b) that the adviser has permission under Part 4A of the 2000 Act to carry on the

regulated activity in article 53E of the 2001 Order;

(c) the firm reference number of the company or business in which the adviser

works for the purposes of authorisation from the Authority to carry on the

regulated activity in article 53E of the 2001 Order; and

(d) the member’s name, and the name of the scheme in which the member has

subsisting rights in respect of safeguarded benefits to which the advice given

applies.

2.
RELEVANT REGULATORY PROVISIONS


Statements of Principle and Code of Practice for Approval Persons


2.1.
The Authority’s Statements of Principle and Code of Practice for Approved Persons

have been issued under section 64 of the 2000 Act2. The Code of Practice for

Approved Persons sets out descriptions of conduct which, in the opinion of the

Authority, do not comply with a Statement of Principle. It also sets out factors

which, in the Authority’s opinion, are to be taken into account in determining

whether an approved person’s conduct complies with a Statement of Principle.

2.2.
During the Relevant Period, Statement of Principle 1 stated:

“An approved person must act with integrity in carrying out his accountable

functions.”

2 Section 64A of the 2000 Act from 7 March 2016.

2.3.
During the Relevant Period, accountable functions are in summary: the Authority’s

controlled functions; the Prudential Regulatory Authority’s controlled functions; and

any other functions in relation to the carrying on a regulated activity; in relation to

the authorised persons in relation to which that person is an approved person.

Conduct of Business Sourcebook

2.4.
The following rules and guidance in COBS (as were in place during the Relevant

Period) are relevant to assessing suitability of Pension Transfer advice given to

clients:

2.5.
COBS 2.1.1R stated that a firm must act honestly, fairly and professionally in

accordance with the best interests of its client.

2.6.
COBS 4.2.1R(1) stated that a firm must ensure that a communication or a financial

promotion is fair, clear and not misleading.

2.7.
COBS 9.2.1R stated that:


(1) A firm must take reasonable steps to ensure that a personal recommendation,

or a decision to trade, is suitable for its client.

(2) When making the personal recommendation or managing his investments, the

firm must obtain the necessary information regarding the client’s:

(a) knowledge and experience in the investment field relevant to the specific

type of designated investment or service;

(b) financial situation; and


(c) investment objectives;


so as to enable the firm to make the recommendation, or take the decision,

which is suitable for him.

2.8.
COBS 9.2.2R(1) stated that a firm must obtain from the client such information as

is necessary for the firm to understand the essential facts about him and have a

reasonable basis for believing, giving due consideration to the nature and extent of

the service provided, that the specific transaction to be recommended, or entered

into in the course of managing:

(a) meets his investment objectives;


(b) is such that he is able financially to bear any related investment risks consistent

with his investment objectives; and

(c) is such that he has the necessary experience and knowledge in order to

understand the risks involved in the transaction or in the management of his

portfolio.

2.9.
COBS 9.2.2R(2) stated that the information regarding the investment objectives of

a client must include, where relevant, information on the length of time for which

he wishes to hold the investment, his preferences regarding risk taking, his risk

profile, and the purposes of the investment.

2.10. COBS 9.2.2R(3) stated that the information regarding the financial situation of a

client must include, where relevant, information on the source and extent of his

regular income, his assets, including liquid assets, investments and real property,

and his regular financial commitments.

2.11. COBS 9.2.3R stated that the information regarding a client’s knowledge and

experience in the investment field includes, to the extent appropriate to the nature

of the client, the nature and extent of the service to be provided and the type of

product or transaction envisaged, including their complexity and the risks involved,

information on:

(1) the types of service, transaction and designated investment with which the

client is familiar;

(2) the nature, volume, frequency of the client’s transactions in designated

investments and the period over which they have been carried out;

(3) the level of education, profession or relevant former profession of the client.

2.12. COBS 9.2.6R stated that if a firm does not obtain the necessary information to

assess suitability, it must not make a personal recommendation to the client or

take a decision to trade for him.

2.13. COBS 9.4.1R(4) stated that a firm must provide a suitability report to a retail client

if the firm makes a personal recommendation to the client and the client enters

into a pension transfer, pension conversion or pension opt-out.

2.14. COBS 9.4.7R stated that the suitability report must, at least:


(1) specify the client's demands and needs;


(2) explain why the firm has concluded that the recommended transaction is

suitable for the client having regard to the information provided by the client;

and

(3) explain any possible disadvantages of the transaction for the client.


2.15. COBS 19.1.1R stated that if an individual who is not a Pension Transfer Specialist

gives advice or a personal recommendation about a Pension transfer, a pension

conversion or pension opt-out on a firm's behalf, the firm must ensure that the

recommendation or advice is checked by a Pension Transfer Specialist.

2.16. COBS 19.1.2R stated that a firm must:


(1) compare the benefits likely (on reasonable assumptions) to be paid under a

defined benefits pension scheme or other pension scheme with safeguarded

benefits with the benefits afforded by a personal pension scheme, stakeholder

pension scheme or other pension scheme with flexible benefits, before it advises

a retail client to transfer out of a defined benefits pension scheme or other

pension scheme with safeguarded benefits;

(2) ensure that that comparison includes enough information for the client to be

able to make an informed decision;

(3) give the client a copy of the comparison, drawing the client's attention to the

factors that do and do not support the firm's advice, in good time, and in any

case no later than when the key features document is provided; and

(4) take reasonable steps to ensure that the client understands the firm's

comparison and its advice.

2.17. COBS 19.1.3G explained the information that should be contained within a

comparison. In particular, the comparison should:

(1) take into account all of the retail client's relevant circumstances;


(2) have regard to the benefits and options available under the ceding scheme and

the effect of replacing them with the benefits and options under the proposed

scheme;

(3) explain the assumptions on which it is based and the rates of return that would

have to be achieved to replicate the benefits being given up;

(4) be illustrated on rates of return which take into account the likely expected

returns of the assets in which the retail client's funds will be invested; and

(5) where an immediate crystallisation of benefits is sought by the retail client prior

to the ceding scheme’s normal retirement age, compare the benefits available

from crystallisation at normal retirement age under that scheme.

2.18. COBS 19.1.6G stated that when advising a client who is, or is eligible to be, a

member of a defined benefit pension scheme (as defined in the Handbook) or other

scheme with safeguarded benefits whether to transfer, convert or opt-out, a firm

should start by assuming that a transfer, conversion or opt-out will not be suitable.

A firm should only consider a transfer, conversion or opt out to be suitable if it can

clearly demonstrate, on contemporary evidence, that the transfer, conversion or

opt-out is in the client’s best interests.

2.19. COBS 19.1.7G stated that when a firm advises a retail client on a pension transfer,

pension conversion or pension opt-out, it should consider the client’s attitude to

risk including, where relevant, in relation to the rate of investment growth that

would have to be achieved to replicate the benefits being given up.

The Fit and Proper Test for Approved Persons

2.20. The part of the Authority’s Handbook entitled “The Fit and Proper Test for Approved

Persons” (“FIT”) sets out the criteria that the Authority will consider when assessing

the fitness and propriety of a candidate for a controlled function. FIT is also relevant

in assessing the continuing fitness and propriety of an approved person.

2.21. FIT 1.3.1G states that the Authority will have regard to a number of factors when

assessing the fitness and propriety of a person. The most important considerations

will be the person’s honesty, integrity and reputation, competence and capability,

and financial soundness.

Enforcement Guide

2.22. The Authority’s policy in relation to prohibition orders and withdrawals of approval

is set out in Chapter 9 of the Enforcement Guide (“EG”).

2.23. EG 9.1 states that the Authority may exercise this power where it considers that,

to achieve any of its regulatory objectives, it is appropriate either to prevent an

individual from performing any functions in relation to regulated activities or to

restrict the functions which he may perform.

2.24. EG 9.3.1 provides that when the FCA has concerns about the fitness and propriety

of an approved person, it may consider whether it should prohibit that person from

performing functions in relation to regulated activities, withdraw its approval, or

both.

2.25. EG 9.3.2 provides that when the Authority decides whether to make a prohibition

order against an approved person and/or withdraw their approval the Authority will

consider all the relevant circumstances of the case. These may include, but are not

limited to:

(2) Whether the individual is fit and proper to perform functions in relation to

regulated activities;

(5) The relevance and materiality of any matters indicating unfitness;

(8) The severity of the risk which the individual poses to consumers and to

confidence in the financial system.

2.26. EG 7 sets out the Authority’s approach to exercising its power to impose a financial

a penalty.

Decision Procedures and Penalties Manual


2.27. Chapter 6 of Decision Procedures and Penalties Manual (“DEPP”) which forms part

of the Authority’s Handbook, sets out the Authority’s policy for imposing a financial

penalty. The Authority applies a five-step framework to determine the appropriate

level of financial penalty. DEPP 6.5B sets out the details of the five-step framework

that applies to financial penalties imposed on individuals in non-market abuse

cases, which can be accessed here:

2.28. The Authority’s approach to financial penalties is set out in Chapter 7 of EG, which

can be accessed here:

ANNEX B

Frank Oxberry’s Representations

1. A summary of the key representations made by Mr Oxberry and of the Authority’s
conclusions in respect of them (in bold type) is set out below.

Regulatory environment

2. SMP was a firm providing a limited TVAS-related service to give to a client an
indicator as to whether or not there might be merit in considering a transfer out of
a Defined Benefit Pension Scheme. Mr Oxberry considered that this was akin to a
triage service to weed out patently unsuitable cases and highlight cases where a
transfer might be justified.

3. The above approach did not have “obvious deficiencies”. During the Relevant Period
it was not uncommon for financial advice firms to undertake a preliminary
assessment of potential suitability for transfer in defined benefit pension cases. The
extent of this practice became so widespread that the Authority considered that it
had to take action to address what it regarded as an issue: see the Authority’s
Consultation Paper in June 20173 (“CP 17/16”) and the subsequent Policy
Statement in March 20184 (“PS 18/06”), requiring, amongst other things, that
Pension Transfer advice be given by way of a Personal Recommendation, and
requiring a full assessment of a scheme member’s circumstances. Before this point
the regulatory environment was not clear.

4. SMP was not alone in utilising a more limited review model in connection with
potential Pension Transfers. This was clearly a very widespread problem and had
been exacerbated by the Authority failing to give clear guidance. The relevant
finalised guidance and rules were published at the end of March 2018 – over 18
months after the end of the Relevant Period - and by this point in time, the
Authority had made much clearer its expectation of firms.

5. Although Mr Oxberry has accepted in hindsight that the Pension Transfer Model was
non-compliant (as the process strayed into giving a Personal Recommendation),
the model was not so out of step with market practice as to be clearly a reckless
process such that he, as a CF4 (Partner), should have spotted that it was obviously
flawed and done something about it. It is important to place any alleged failures of
Mr Oxberry into the appropriate regulatory context, and the Authority should not
act in a disproportionate way with respect to Mr Oxberry.

6. SMP provided Personal Recommendations by way of the Pension Transfer
Model to certain of its retail clients. Mr Oxberry’s reference to the
widespread practice, requiring addressing by the Authority, in CP 17/16
and PS 18/06 related to firms which had been undertaking a preliminary
assessment without making a Personal Recommendation. Contrary to Mr
Oxberry’s contention, the relevant regulatory environment during the
Relevant Period was clear and the Authority’s case has not been advanced
with the benefit of post-PS 18/06 hindsight. COBS 19.1.2R(1) in particular
stated that a firm was required to: “compare the benefits likely (on
reasonable assumptions) to be paid under a defined benefits pension


scheme or other pension scheme with safeguarded benefits with the
benefits afforded by a personal pension scheme, stakeholder pension
scheme or other pension scheme with flexible benefits, before it advises a
retail client to transfer out of a defined benefits pension scheme or other
pension scheme with safeguarded benefits”. The TVAS produced under the
Pension Transfer Model did not comply with this requirement. For the
reasons set out in this Notice, and referred to at paragraphs 24 – 35 below,
the Authority is of the view that Mr Oxberry’s conduct was reckless and
lacking in integrity.

7. The Authority had also published guidance before the Relevant Period,
namely the two alerts dated 18 January 2013 and 28 April 2014 concerning
firms advising on Pension Transfers with a view to investing pension
monies into unregulated products through investment wrappers. These
alerts were specifically drawn to SMP’s attention.

Structure of SMP and roles of individuals

8. SMP was a small regional firm and took compliance very seriously. It maintained a
compliance function that operated independently, it staffed the function
appropriately and proportionately and it also provided an external compliance
resource for the SMP compliance function to use, as and when it saw fit. SMP
allocated to a director and senior manager of the Firm (Mr Cuthbert) responsibility
to manage and oversee the Firm’s compliance function and to report to the
management as a whole (and Mr Oxberry in particular) any relevant compliance
matters.

9. The system in place at SMP allocated to Mr Cuthbert responsibility for compliance,
with support from the Compliance Manager (and external consultants), and it was
Mr Cuthbert’s responsibility to bring any relevant matters to Mr Oxberry’s attention.
This system was perfectly adequate for a small firm such as SMP. Mr Oxberry and
SMP complied with the Authority’s rules, amongst other things, to establish,
implement and maintain adequate policies and procedures taking into account the
nature, scale and complexity of the Firm’s business5. If the compliance function
failed to assess and monitor the Pension Transfer Model properly, Mr Cuthbert and
SMP’s compliance function must take responsibility for this, and the Authority
should not seek to attribute responsibility for this alleged failure to Mr Oxberry.

10. The SMP compliance function was not ineffective at the time. Although Mr Cuthbert
was coming into the SMP offices for around 3 days a week, he was available at all
times and his focus remained on compliance. He was still doing his job. Although
the Compliance Manager was not a Pension Transfer Specialist, he was very
experienced from a compliance perspective and had dealt with compliance matters
before he joined SMP. He joined SMP on that basis and in the full expectation of
taking over from Mr Cuthbert on Mr Cuthbert’s forthcoming retirement.

11. The Pension Transfer Model was not a significant expansion of SMP’s business. The
anticipated income for SMP was a small fraction of its overall turnover. Mr Oxberry’s
role of business development did not mean he would oversee the compliance
function’s review of any new business. His role was to generate potential workflows
relating to clients or potential lines of business. Whether or not SMP pursued any


5 SYSC 6.1.2R during the Relevant Period.

opportunities fell to compliance, headed up by Mr Cuthbert, which had to approve
the relevant business. Mr Oxberry was not involved in that process nor in the
compliance function’s final decision as to whether to proceed. Mr Oxberry relied on
the SMP compliance function to investigate the proposals for the Pension Transfer
Model to arrive at a decision as to whether the business was compliant, and the
Firm could proceed with it. He did not simply rely on the assurances of Mr Douglas
and Mr Martin. There was a clear division of responsibility between Mr Oxberry, and
Mr Cuthbert and the compliance function; ensuring business was conducted in a
compliant manner was the responsibility of Mr Cuthbert. It cannot be the case that
all partners in a firm have to be responsible for all aspects of its business.

12. The Pension Transfer Model represented a rapid and novel expansion of
SMP’s business operations both in terms of: (1) the accelerated rate and
increased volume at which clients were advised, with at least 547 new
clients being advised in a nine month period, and an anticipated caseload
of 20-25 cases per week; and (2) the number of new business
relationships with introducers, involving at least 17 introducers with
which SMP had not worked previously. Mr Oxberry had a key role in
overseeing this expansion of the business and to take reasonable steps to
ensure the Pension Transfer Model was compliant; this was not solely
within the remit of SMP’s compliance function.

13. During the Relevant Period SMP retained £139,129.80 after payment of
the commission to Mr Douglas and Mr Martin, a substantial sum for a
period of nine months’ business. This was not a small fraction of the
overall turnover of SMP for the period in question.

14. Although Mr Cuthbert led SMP’s compliance function, the Authority
considers that the due diligence on the Firm’s partner introducers was
within Mr Oxberry’s accountable areas of the business as CF4 (Partner)
and cannot be attributed solely to the compliance function of the Firm.
SMP, a small firm with two CF4 Partners, was embarking on a novel and
rapid expansion of its business operations at a time of reduced
effectiveness of the compliance function due to: (i) Mr Cuthbert’s
reduction in his hours/time spent in the office ahead of his planned
retirement; and (ii) the Compliance Manager’s lack of relevant experience
- not being a qualified Pension Transfer Specialist meant that he was
unable to address the deficiencies of the Pension Transfer Model and
adequately monitor the Pension Transfer advice given by the two qualified
Pension Transfer Specialists, Mr Douglas and Mr Martin.

15. In addition, SMP did not seek advice from the Compliance Consultant to
verify the compliance of the Pension Transfer Model prior to, during or
after its implementation. This was notwithstanding the Compliance
Consultant visiting SMP’s offices on 18 November 2015 to carry out a
compliance audit, around the same time the Pension Transfer Model was
being set up. Mr Oxberry failed to ensure or check that SMP had obtained
such advice.

16. In the case of Alistair Burns v The Financial Conduct Authority6 the
Tribunal stated that, whilst “it is permissible for a board to vest prime
responsibility… for compliance in one of their number who is more expert
than others… it does not absolve the other members of the board from
obtaining a sufficient understanding of the business of the firm which they
are ultimately responsible for managing, the key issues that are likely to
arise out of its business model, and the manner in which they are being
addressed”7. The Authority considers that Mr Oxberry failed to obtain a
sufficient understanding of this part of the business of the Firm, and in
particular adequately inform himself of the key issues arising out of the
Pension Transfer Model and how they were being addressed. A key issue
was why significant breaches (whether suspected or actual) of the
relevant requirement and standards of the regulatory system were arising
(taking into account of the systems and procedures in place)8.

Mr Oxberry’s conduct and recklessness

17. Mr Oxberry denies that he unreasonably failed to address the suspicious signs of
certain risks of which he is said to have been aware. Mr Oxberry was not involved
in the initial creation of the Pension Transfer Model, so cannot have been aware of
any suspicious signs relating to that. Mr Oxberry has no recollection of a discussion
with Mr Welsh in October 2015 (as referenced at paragraph 4.17 of the Notice).
The ACER Introducers Agreement was negotiated by Mr Douglas, not by Mr
Oxberry. Although the document was prepared for signature by either Mr Cuthbert
or Mr Oxberry, the document does not fix Mr Oxberry with knowledge of a
“suspicious sign” that SMP might be becoming involved in a scheme allegedly
designed by FRPS to transfer client pensions into TRG investments.

18. Although Mr Oxberry attended a meeting with TRG in October 2015, this did not
signify an active involvement in the matters then at hand. FRPS and TRG were
considered two separate entities by SMP and by Mr Oxberry, and e-mails from TRG
provided some due diligence information on TRG and their investments (the hotel
resorts). Mr Oxberry’s understanding of the meetings was that SMP was looking to
work with FRPS as an introducer and that responsibility for making those
arrangements and undertaking due diligence rested with the compliance function
at SMP. Separately, TRG wanted SMP to consider recommending its investments to
SMP clients. The link between FRPS and TRG is not sufficient to show that Mr
Oxberry was aware or should have suspected (by reason of any “suspicious signs”)
that FRPS might be intending to abuse the TVAS process to transfer their clients
into potentially unsuitable TRG investments. Mr Oxberry has no recollection of
attending any further meetings in relation to FRPS and there is no evidence to
indicate that Mr Oxberry was “actively involved” generally in SMP’s dealings with
FRPS.

19. Mr Oxberry did not play an active role in approving the Pension Transfer Model; he
did not have the experience or understanding to make a judgement call on whether
the Pension Transfer Model was compliant. Mr Oxberry did not, therefore, “sign off”
the Pension Transfer Model; he merely gave the go-ahead to consider a potential


6 [2018] UKUT 0246 (TCC).
https://assets.publishing.service.gov.uk/media/5b61add9e5274a5f5a33a3ec/Alistair_Rae_Burns_v_FCA.pdf
7 Alistair Burns v FCA [2018] UKUT 0246 (TCC) at paragraph 285.
8 APER 4.7.5G. Although this is in relation to Statement of Principle 7, the Authority considers that the same
requirement for the individual to take such reasonable steps as envisaged within the guidance applies in this
case.

new business stream; the process and Pension Transfer Model was “signed off” by
SMP’s compliance function and Mr Cuthbert. Mr Oxberry was justified in expecting
that they would arrive at the right conclusion around compliance issues like the
Pension Transfer Model. If the Pension Transfer Model was non-compliant, as it
relied simply on TVAS data, that is something that was also being done by hundreds
of other firms. Any deficiency on the part of SMP in advising on that limited basis
cannot have been “clear” or obvious.

20. The alleged warning signs, as set out in paragraph 4.56, do not indicate obvious
risks of detriment to SMP’s clients and clear deficiencies in the Pension Transfer
Model. A report by the Compliance Manager to Mr Cuthbert, that confirmation of
advice letters were being issued to ceding scheme trustees in all cases, was a report
to Mr Cuthbert not to Mr Oxberry. It cannot therefore have been a warning sign for
Mr Oxberry. The issuing of advice letters (following advice not to transfer) was not
unusual, nor a warning sign of obvious deficiencies and risks in the Pension Transfer
Model. The fact that one introducer involved in the Pension Transfer Model had
written to a ceding scheme trustee using SMP’s Letter of Authority without SMP’s
knowledge was not a deficiency or risk in the Pension Transfer Model; it was a
simple compliance and conduct issue with a specific introducer that was an isolated
incident needing to be dealt with (which it was).

21. A report by the Compliance Manager to Mr Oxberry and Mr Cuthbert that FRPS
appeared to be using an offshore trustee for the clients they introduced was not a
warning sign to Mr Oxberry of obvious deficiencies with the Pension Transfer Model.
The fact that the Compliance Manager expressed to Mr Oxberry and Mr Cuthbert
that he did not trust FRPS appears to have been a personal comment made in an
e-mail in March 2016. It does not indicate, nor is it a warning sign of, obvious
deficiencies and risks in the entire Pension Transfer Model, and Mr Oxberry was
justified in not treating it as such.

22. The Authority’s reliance on The Pensions Regulator’s Determination Notice, referred
to in paragraph 4.55 of the Notice, is not understood. A search of The Pensions
Regulators’ website against Mr Welsh, or ACER, does not reveal the notice and
there is no reason for SMP, or Mr Oxberry, to ought to have been aware of the
Determination Notice about a third-party entity that simply made reference to Mr
Welsh’s previous role as trustee of an Occupational Pension Scheme.

23. Accordingly, Mr Oxberry did not turn a blind eye to issues with the Pension Transfer
Model, nor were there “obviously suspicious signs” of risks with it. Nothing in the
very limited information he had received, through meetings and e-mails, could have
given him the impression that the TVAS-based advice process was intended to be
manipulated by FRPS in conjunction with TRG. Mr Oxberry was not reckless, nor
did he lack integrity.

24. The Pension Transfer Model, which involved focussing on the TVAS
outcome and included a Personal Recommendation, was not a model
widely used within the industry.

25. The Authority considers that Mr Oxberry’s presence at the October 2015
meeting with FRPS and ACER (referred to in paragraph 4.17 of this Notice),
and a further meeting in October 2015 with TRG (referred to in paragraph
4.19) together with subsequent correspondence arising from the meetings
copied to him, provided him with clear indications of FRPS’s financial

interest in promoting TRG’s investments. A further email from FRPS to
SMP dated 30 October 2015, copied to Mr Oxberry, sought to organise a
meeting between FRPS, SMP and the Overseas Adviser Firm (which was a
business partner of FRPS and TRG); this demonstrated the connection
between FRPS and the Overseas Adviser Firm. In addition, Mr Douglas sent
a copy of the ACER Introducers Agreement to Mr Oxberry on 18 January
2016, which referred to FRPS and TRG effectively as the same introducer:
“3rd Party Introducer 1: FRPS / The Resort Group”.

26. Accordingly, the Authority considers that Mr Oxberry remained actively
involved in the discussions and meetings surrounding the establishment
of the Pension Transfer Model with FRPS. To someone in Mr Oxberry’s
position and with his level of experience, the indications of the connections
between FRPS and TRG, and the likely destination of the funds of clients
who were advised through the Pension Transfer Model, must have been
obvious to him at the time.

27. In the Authority’s view, Mr Oxberry had a role in putting in place the ACER
Introducers Agreement. The signature block in the ACER Introducers
Agreement includes Mr Oxberry’s name on behalf of SMP, reflecting that
he (along with Mr Cuthbert) had authority on behalf of SMP to sign the
ACER Introducers Agreement.

28. As set out in paragraph 4.55 of this Notice, Mr Oxberry’s failure to
challenge Mr Cuthbert, Mr Douglas and Mr Martin in the circumstances set
out therein was important, because if he had done so and SMP had
exercised the greater care and due diligence required, SMP would have
questioned Mr Welsh as to whether he had been subject to any regulatory
investigation/action, before embarking upon the business relationship
with ACER. At the time of his introduction to SMP in October 2015, Mr
Welsh must have been aware that he was the subject of a Determination
Notice given by The Pensions Regulator, dated 18 June 2015, so this fact
should have been uncovered and raised concerns with SMP and therefore
Mr Oxberry. The Pensions Regulator’s Final Notice, dated 8 February 2016,
was published on The Pensions Regulator’s website. Accordingly, there
was also publicly available material during the Relevant Period, which
would have raised concerns with SMP and therefore Mr Oxberry, had
appropriate due diligence on Mr Welsh been carried out.

29. Mr Oxberry subsequently accepted that an introducer writing to a ceding
scheme trustee using SMP’s Letter of Authority without SMP’s knowledge
was unacceptable but has dismissed it as an isolated incident. In the
Authority’s view, this was a clear warning sign of deficiencies in the
Pension Transfer Model and of the risk of detriment to SMP’s clients.
Accordingly, the Authority considers that Mr Oxberry should have (i)
questioned the suitability of SMP’s partner introducers and SMP’s
continuing involvement with them, and (ii) caused a review of SMP’s
relationship with third-party introducers and SMP’s controls to be carried
out.

30. The report by the Compliance Manager that FRPS appeared to be using an
offshore trustee for the clients it introduced was an indication that clients
were being led by FRPS to invest in overseas, unregulated and potentially

high-risk investments. This followed the clear indications which Mr
Oxberry had already received during the design of the Pension Transfer
Model of the connections between FRPS, TRG and the Overseas Adviser
Firm. The Compliance Manager’s email stated that the offshore trustee
“only run QROPS out of Guernsey/Gibraltar”, which suggested the
possible involvement of TRG, which Mr Oxberry would have known was
based in Gibraltar. That the main introducer involved in the Pension
Transfer Model (which introduced 440 of the at least 547 clients advised
under the model) was using an offshore trustee for the clients it
introduced was a clear warning sign (which Mr Oxberry closed his mind
to) of deficiencies in the Pension Transfer Model and the risk of detriment
to SMP’s clients.

31. The comment made by the Compliance Manager that he did not trust FRPS,
was made in the context of a suggestion by the Compliance Manager that
clients should receive a copy of SMP’s advice letter directly from SMP,
rather than via the introducer. This was another warning sign (which Mr
Oxberry closed his mind to) that SMP’s clients were being exposed to a
significant risk of detriment arising from the practices of an introducer.

32. The failure by an individual to act on serious risks to which the individual
closes his mind may constitute reckless conduct. In determining whether
an individual’s conduct was reckless, it is necessary to take into account
the individual’s level of experience and their position, to decide how
obvious the risks were. In this regard Mr Oxberry was an experienced
financial adviser and one of the two CF4s (Partner) at SMP.

33. The Authority considers that Mr Oxberry closed his mind to clear
indications of the risks of detriment to SMP’s clients arising from the
deficiencies in Pension Transfer Model (as set out in paragraph 5.3 of this
Notice). These risks must have been clear to him in the light of his
experience and his role at SMP, and he failed to take appropriate action to
avoid them.

Financial Penalty and Prohibition

34. Mr Oxberry considers that it is not appropriate to impose any financial penalty, or
prohibition, on him as he has not acted in breach, does not lack integrity and has
not been reckless (also see submission on limitation).

35. The figure referred to in the Notice, namely, £139,129 (see paragraph 6.3 of this
Notice), relates to the gross income received by SMP not Mr Oxberry. The figure
for SMP’s gross income should not be utilised for disgorgement purposes, since it
does not reflect the actual benefit to Mr Oxberry and does not meet the criterion
set out in DEPP 6.5B.1.G, which is to “deprive an individual of the financial benefit
derived directly from the breach (which may include the profit made or loss
avoided)”.

36. It is difficult for Mr Oxberry to establish and extract the precise operational costs
incurred for the Pension Transfer business alone from the operational costs of SMP’s
business as a whole and to provide documentary evidence in support. He has
provided his best estimates. Mr Oxberry considers that there were three areas of
additional operational costs for SMP which should be taken into account, when

assessing the actual benefit to him. These additional operational costs relate to
increases in SMP’s: (1) staff costs; (2) rental costs; and (3) regulatory fees.

37. Mr Oxberry recalls two additional staff being employed by SMP at around the start
of the Relevant Period (not working exclusively on the Pension Transfer Model),
with an annual additional cost to SMP of around £60,000. He estimates that two
staff overall were assigned to assisting with the Pension Transfer Model.

38. SMP moved to larger, more expensive, premises around the time Mr Douglas and
Mr Martin joined the Firm: SMP had been paying rent at around £9,000 per month
before they joined; during the Relevant Period SMP paid rent at around £16,000
per month; and after Mr Douglas and Mr Martin left SMP, the Firm reverted back to
the smaller size premises, costing around £8,000 per month. Mr Oxberry estimates
that the rental costs associated with the operation of the Pension Transfer Model
should be estimated at around £8,000 per month. In addition, SMP incurred an
increase in regulatory fees arising out of an increased turnover because of the
operation of the Pension Transfer Model. Mr Oxberry has not been able to quantify
the increase in SMP’s regulatory fees due to the Pension Transfer Model. Mr Oxberry
considers that these additional operational expenses should be taken into account
when assessing the actual benefit to him. If these are all taken into account, Mr
Oxberry received no direct benefit from the operation of the Pension Transfer
Model.

39. In any event, Mr Oxberry did not receive a share of the gross income received by
SMP – instead he received a share of the profit on this sum (which is the element
anticipated to be used by DEPP 6.5B.1G9) and this share was much lower. In the
18-month period up to September 2016 (i.e. covering the entirety of the Relevant
Period) SMP’s pre-tax profit margin was 17.9% (namely pre-tax profit of £423,513
on income of £2,366,516). The figures provided by Mr Oxberry to the Authority
indicate that Mr Oxberry was entitled to around 65% of SMP’s profits during the
Relevant Period, the remainder being paid to Mr Cuthbert. If the increase in
operational costs, referred to in paragraphs 36-38 are not taken into account when
assessing the direct benefit to Mr Oxberry, the financial benefit derived directly
from the breach is £16,18710.

40. The seriousness of the breach should be appropriately assessed at level 2
seriousness. The level 4 or 5 factors as set out in DEPP 6.5B.2G(12) do not apply:
any losses were primarily caused by the actions of introducers and of Mr Douglas
and Mr Martin, who brought their scheme to SMP, and the losses were not caused
by Mr Oxberry. Furthermore, any breach resulting from an alleged lack of oversight
was inadvertent and was neither deliberate nor reckless. The level 1, 2 or 3 factors
do apply, as follows: little profit was made by Mr Oxberry as a result of an alleged
lack of oversight; there is no evidence that the alleged breach indicated a
widespread problem at the firm and the alleged breach was at worst inadvertent or
negligent. The financial penalty, at Step 2, should therefore be 10% of £291,586,
namely £29,158.

9 DEPP 6.5B.1G: The Authority will seek to deprive an individual of the financial benefit derived directly from
the breach (which may include the profit made or loss avoided) where it is practicable to quantify this. The
Authority will ordinarily also charge interest on the benefit. Where the success of a firm’s entire business model
is dependent on breaching the Authority’s rules or other requirements of the regulatory system and the
individual’s breach is at the core of the firm’s regulated activities, the Authority will seek to deprive the
individual of all the financial benefit he has derived from such activities.
10 Total pre-tax profit for SMP is 17.9% of the gross income received by SMP, i.e £139,129 = £24,904; Mr
Oxberry received 65% of £24,904 = £16,187.

41. There should be no uplift for aggravating factors. Mr Oxberry relied on the
compliance function to ensure that the business was run compliantly and was
entitled to rely on it to deal with any issues highlighted by the Authority, including
the alerts referred to in the Notice. Mr Oxberry did not believe that SMP was
providing regulated advice on Pension Transfers and was not in a position to
determine that regulated advice was actually being given, which would give rise to
various regulatory obligations. As SMP’s compliance function did not consider that
regulated advice was being given by SMP, Mr Oxberry was not in a position to
determine otherwise, whether as a result of the alerts or anything else. The alerts
are, therefore, not relevant aggravating factors.

42. Accordingly, the total financial penalty should be £29,158 (if the operational
expenses are all taken into account) or £45,346 if they are not (exclusive of
interest).

43. The Authority considers that it is appropriate and proportionate to impose
a financial penalty, and prohibition order, on Mr Oxberry as he has acted
in breach, and lacks integrity.

44. DEPP 6.5B.1G provides that the Authority will seek to deprive an individual
of the financial benefit derived directly from the breach (which may
include the profit made or loss avoided), where it is practicable to quantify
this. The Authority accepts that operational expenses which are directly
referable to the Pension Transfer Model are deductible from the benefit
received by SMP and thus may be taken into account before calculating the
benefit received by Mr Oxberry. Accordingly, the commission payments
made to Mr Douglas and Mr Martin have been appropriately deducted as
operational expenses.

45. On the other hand, operational expenses which are general business
overheads of SMP’s business (and therefore not directly referable to the
Pension Transfer Model) are not deductible. Mr Oxberry has provided
inadequately evidenced estimates for increases of expenditure SMP
incurred around the time of the Relevant Period. The Authority notes that
the two additional staff members employed did not exclusively work for
SMP on the Pension Transfer Model, and the amount of time they did work
on it is unclear. It also appears to the Authority that the increase in rental
expenditure was incurred irrespective of the revenue generated from the
Pension Transfer Model. Finally, Mr Oxberry has not provided an estimate
of any relevant increase in regulatory fees, but in any event the Authority
considers that these would not have been directly referable to the Pension
Transfer Model. Accordingly, the Authority considers that the three
specified
additional
operational
expenses
are
more
appropriately
characterised as increases in general business overheads of SMP’s
business. The Authority has therefore (for the purposes of disgorgement)
not made any deductions from the income received by SMP from the
operation of the Pension Transfer Model other than the commission
payments made to Mr Douglas and Mr Martin.

46. According to Mr Oxberry, he received around a 65% profit share during
the Relevant Period, the remainder being paid to Mr Cuthbert. On that
basis the financial benefit derived directly from the breach and received

by him is £90,433 (exclusive of interest). The Step 1 figure for
disgorgement is therefore £90,433.

47. The Authority considers that Mr Oxberry was reckless and that he failed to
act with integrity in relation to the design and operation of the Pension
Transfer Model. His actions caused a significant loss or risk of loss to
individual consumers and level 4 and 5 factors as set out at paragraph 6.19
of this Notice apply. The seriousness of the breach is appropriately
assessed at level 4 seriousness. The financial penalty, at Step 2, is
therefore 30% of £291,586, namely £87,475.

48. The Authority considers that the Authority’s alerts to firms advising on
Pension Transfers with a view to investing pension monies into
unregulated products through investment wrappers, in January 2013 and
April 2014, and sent to SMP in April 2015 and March 2016 are relevant
aggravating factors for Mr Oxberry. These alerts related to the activities
of the Firm with respect to consumers and were intended to prevent
precisely the type of consumer detriment which occurred in this case.
They were not matters solely for the compliance function of the Firm but
rather for its senior managers, which included Mr Oxberry. The Authority
considers that a 10% aggravating uplift is an appropriate and
proportionate uplift in the circumstances of the case.

Limitation

49. The limitation period for the Authority being able to take disciplinary action against
Mr Oxberry, pursuant to section 66 of the Act, is six years from the point at which
the Authority either had knowledge of Mr Oxberry’s misconduct or had information
from which the misconduct can reasonably be inferred (section 66(5)(a)).
Proceedings against a person are to be treated as begun when a warning notice is
given to him; the warning notice was issued to Mr Oxberry on 28 September 2022.
Mr Oxberry’s disciplinary case was time-barred as the Authority had information
from which his misconduct could be reasonably inferred before 28 September 2016,
and accordingly a financial penalty cannot now be imposed by the Authority.

50. The case of Haward v Fawcetts11 makes it clear that a claimant12 need not fully
appreciate that it has a clear claim against an adviser; there should merely be
sufficient information to justify the claimant setting about investigating the facts,
to see if the relevant party may have been negligent. The Haward case sets the
bar relatively low as to when the clock starts running for limitation purposes. The
Authority does not have to know that there was misconduct, or a prima facie case
of, or probable, misconduct. The relevant point to determine is the point when the
circumstances objectively justified the Authority looking more closely at matters to
see if there had been misconduct by Mr Oxberry.

51. The Authority considers that the date on which it had information from which Mr
Oxberry’s misconduct can reasonably be inferred is 3 October 2016, and that this
information was imparted to it no earlier than at the meeting it had on that date
with, amongst others, Mr Oxberry (“the October 2016 Meeting”). However, with



11 [2006] UKHL 9.
12 This was a professional negligence case where sections 14 and 14A of the Limitation Act 1980 were
discussed.

respect to Mr Douglas and Mr Martin the Authority accepts that it had the necessary
information before this date as regards similar misconduct arising out of the same
circumstances. Mr Oxberry does not agree that limitation with respect to him runs
from a later date than for Mr Douglas and Mr Martin.

52. One of the central planks of the Authority’s case against Mr Oxberry is that as a
partner of SMP he was personally responsible for ensuring that reasonable steps
were taken to ensure that the firm complied with the relevant regulatory
requirements13. The Authority has repeatedly emphasised that there were
significant and clear deficiencies in the Pension Transfer Model and that those
deficiencies must have been obvious to Mr Oxberry in light of his experience as a
financial adviser and his senior position at SMP.

53. In light of the Authority’s position, it must follow that, once the Authority had
sufficient information relating to the “obviously” flawed Pension Transfer Model to
infer or to justify looking into misconduct, the clock started running for limitation
purposes with respect to Mr Oxberry. If the Authority had information from which
it could reasonably infer misconduct on the part of Mr Douglas and Mr Martin in
connection with the Pension Transfer Model before the October 2016 Meeting, then
it must at the same time have been able reasonably to infer misconduct on the part
of Mr Oxberry.

54. Up to the end of April 2016, the Authority had received various reports relating to
potentially concerning Pension Transfers involving SMP and which appeared to
indicate that SMP was giving transfer advice without considering the destination of
the transferred funds (a regulatory breach and indicative of a non-compliant
process). The Authority instigated contact with SMP on 9 March 2016 with regard
to its Pension Transfer activities. In May 2016 the Authority requested client files
to investigate the advice process and these were provided to the Authority by SMP
on 18 May 2016. It is clear from these documents that SMP must have been
operating a non-compliant process: they clearly contain information from which,
on the Authority’s case (namely that Mr Oxberry was responsible for ensuring
regulatory compliance and overseeing the business) misconduct by Mr Oxberry
could be inferred.

55. On 26 July 2016, the Authority wrote to SMP setting out its concerns and requesting
further information. This was provided on 9 August 2016 by SMP and included
further documents relating to its relationships with unregulated introducers and the
flawed Pension Transfer Model, re-emphasising the “inherent flaws” of a TVAS-
based advice process with no consideration of the client’s circumstances or the
destination of the funds. The date on which misconduct by Mr Oxberry on the
Authority’s case (for ensuring regulatory compliance and overseeing the business)
could reasonably have been inferred must therefore have been by no later than 9
August 2016. Further information received on 2 August 2016 relating to the
provision of confirmation of advice letters also highlighted the inherent flaws in the
Pension Transfer Model from which Mr Oxberry’s misconduct, on the Authority’s
case (for ensuring regulatory compliance and overseeing the business), could
reasonably be inferred.

56. Accordingly, the Authority had sufficient information and documentation before the
October 2016 Meeting from which misconduct on the part of Mr Oxberry could

13 Alistair Burns v FCA [2018] UKUT 0246 (TCC) at paragraph 285.

reasonably be inferred in terms at least of appreciating the need to investigate
further. As the Authority had the requisite knowledge before 28 September 2016,
it is time-barred from imposing the proposed financial penalty on Mr Oxberry.

57. In Andrew Jeffery v Financial Conduct Authority14 15 the Tribunal held 16

that: “It is not sufficient that the Authority has information in its hands
that would give rise to a mere suspicion. Nor is it enough that the
information might suggest that there was misconduct, but that the person
in question has not been identified as the apparently guilty party. The
Authority must either know or be treated, by reasonable inference, as
knowing of the misconduct by a particular person. The reference in
s[ection] 66(4) to “the misconduct” (our emphasis) clearly refers to the
particular misconduct in respect of which action is to be taken against a
particular person, and not to conduct of a similar nature in respect of which
information may have been obtained earlier.”

58. The Tribunal also held that:17 “The Authority must, however, have
sufficient knowledge of the particular misconduct, or such knowledge
must be capable of being reasonably inferred, to justify an investigation.
Mere suspicion is not enough, nor is any general impression that
misconduct may have taken place”. In relation to the culpability of
individuals, DEPP 6.2.7G states that: “[…] disciplinary action will not be
taken against an approved person performing a significant influence
function or a senior conduct rules staff member simply because a
regulatory failure has occurred in an area of business for which he is
responsible.” Regarding a breach of the Statements of Principle, APER
3.1.4G provides: “An approved person will only be in breach of a Statement
of Principle where he is personally culpable”.

59. Accordingly, mere knowledge that a person was involved in the
management of an area of a firm where regulatory breaches appear to
have occurred is insufficient in itself to draw a reasonable inference that
the individual was guilty of misconduct, and therefore would not be
sufficient in itself to trigger the time limit under section 66(4) of the Act.
Mr Oxberry may have been one of the two CF4 Partners at the Firm; but
being a partner, in itself, is insufficient to amount to the knowledge the
Authority is required to have for the purposes of section 66(4) of the Act.

60. The Authority had had no contact with Mr Oxberry prior to the October
2016 Meeting. The Authority’s email and telephone contact with SMP, prior
to this meeting, had been solely with Mr Cuthbert, except for one
telephone call with the Compliance Manager on 30 March 2016, when Mr
Cuthbert was not available. Neither Mr Cuthbert nor the Compliance
Manager at any time mentioned Mr Oxberry’s involvement in any of the
contacts the Authority had with them prior to arranging the October 2016
Meeting.

61. Whilst the Authority received material relating to SMP’s Pension Transfer
Model in the months before the October 2016 Meeting, Mr Oxberry was not


14 FS/2010/0039.
15 https://assets.publishing.service.gov.uk/media/5752d271ed915d3c89000024/Andrew_Jeffery.pdf
16 paragraph 334: Andrew Jeffery v FCA.
17 paragraph 337: Andrew Jeffery v FCA.

identified in this material other than by his signature on certain introducer
agreements. The Authority was unaware of Mr Oxberry’s personal role in
relation to the Pension Transfer Model; all the Authority was aware of was
that he was a CF4 (Partner).

62. The Authority initially requested the October 2016 meeting to be with Mr
Cuthbert only; Mr Cuthbert responded requesting that he attend with
colleagues but did not specify who they would be. The first time it was
confirmed that, amongst others, Mr Oxberry would attend the meeting was
in an email to the Authority dated 29 September 2016. This was the first
point at which Mr Oxberry’s name was included in any correspondence
with and in any documentation provided to the Authority in response to its
requests for information.

63. In light of the Authority’s concern to identify actual or potential harm
caused to consumers and to address it, the main purpose of the October
2016 Meeting was to clarify how the TVAS-only process operated, to give
SMP the chance to explain its actions and also to see if there were any
mitigating factors relating to the Authority’s concerns. At this stage the
Authority had not focussed on the roles of the individuals at the firm, other
than noting that Mr Cuthbert had overall responsibility for compliance
oversight, as he performed the CF10 (Compliance Oversight) role. Mr
Oxberry admitted at the October 2016 Meeting that SMP had “gone too
far” but did not give an indication of any role he might have played in
relation to SMP’s TVAS-only advice model, and the Authority did not ask
any questions about his specific responsibilities at SMP during the
meeting.

64. Notwithstanding what is set out above, the Authority is content to adopt
the position that the earliest time it could be treated as being aware of the
particular misconduct by Mr Oxberry (in respect of which action is being
taken against him by the Authority), namely, the matters set out in this
Notice, was the October 2016 Meeting.

Enforcement’s unfair approach to the case

65. Mr Oxberry has a number of concerns with the conduct and the approach to the
investigation of the Authority’s Enforcement case team. The Authority has,
amongst other things, taken an overly aggressive stance towards Mr Oxberry and
failed to pursue the investigation with appropriate speed. Accordingly, this has been
unfair to Mr Oxberry. Mr Oxberry has been co-operative with the Authority
throughout the investigation and hired an external, independent compliance
consultant to assist with, amongst other things, complying with the Authority’s
requirements on the Firm.

66. The decision to give Mr Oxberry this Notice was made on behalf of the
Authority by the RDC. As is explained in paragraph 8.2 of this Notice, the
RDC is a committee of the Authority which takes certain decisions on
behalf of the Authority, and its members are separate from the Authority’s
staff involved in conducting investigations and recommending action
against firms and individuals. The RDC has decided to give this Notice on
the basis of the materials before it regarding the conduct of Mr Oxberry.

67. The submissions made by Mr Oxberry, as to the nature and conduct of the
investigation, and his co-operation with the Authority, have been duly
considered by the RDC but it considers that they do not undermine the
evidence on which the decision is based.

The Resort Group Plc’s Representations

1. A summary of the key representations made by TRG and of the Authority’s
conclusions in respect of them (in bold type) is set out below.

2. The starting point should be for the Authority to seek to avoid causing prejudice to
TRG, save to the extent that it considers any matters within the Notice which are
prejudicial to TRG are necessary to support the reasons for its action against Mr
Oxberry. It is not necessary for the Authority’s findings against Mr Oxberry to
identify TRG by name rather than anonymising it, consistent with its usual practice.

3. The Notice contains certain passages that refer to TRG in terms that are highly
prejudicial to TRG, repeating allegations of potential criminality made more than
seven years ago that are denied and have not been proven. These references are
unnecessary to support the action against Mr Oxberry and should be removed. The
effect of the allegations set out in paragraphs 4.13 and 4.55 insinuate that TRG’s
activities and investments are potentially fraudulent. This is denied. It repeats a
reference by The Pensions Regulator to what appears to be a previous statement
made by Action Fraud. Public repetition of a damaging allegation will inevitably
increase the harm caused by the initial allegation.

4. None of Mr Oxberry’s failings set out in the Notice rely on the allegations of fraud
against TRG. The factual background for these findings is established without any
need to reference the allegations of fraud against TRG. The high-risk nature of the
TRG investments, as both unregulated and illiquid, is very clearly articulated in the
Notice. It is inaccurate to conflate the separate and distinct concepts of an
investment being high-risk with an investment being fraudulent.

5. There is no evidence that Mr Oxberry was aware of the determination by the
Pensions Regulator. Accordingly, it is unnecessary to refer to it, as there is no
evidence this would have had any bearing on Mr Oxberry’s judgement and decision-
making in respect of the Pension Transfer Model or how Mr Oxberry should have
assessed Mr Welsh and/or TRG’s investments.

6. There is, therefore, no need to include prejudicial allegations of fraud against TRG
and these should be removed in the interests of fairness.

7. The reference in paragraph 4.13 to the BBC Panorama documentary in July 2016,
two weeks before the end of the Relevant Period, is also irrelevant to the findings
against Mr Oxberry and should be removed. The statement refers to matters that
are prejudicial to TRG but have not been tested by the Authority. The Authority
should not reference unsubstantiated reports of journalists in circumstances where
the fact of publication of those reports is not relevant to the facts or circumstances
of the breach. By including reference to the Panorama documentary, the Notice
suggests that the matters presented in that documentary form part of the
background and circumstances of the Authority’s case.

8. Prejudice alone is not a proper basis upon which to decide to anonymise
and/or remove reference to TRG’s involvement. The appropriate basis, for
anonymising and/or removing reference to TRG’s involvement arises

18 Section 393 of the Act envisages that a “third party” could be identified in a statutory notice even if, in the
opinion of the Authority, the third party is prejudiced; and the third party will then receive a copy of the notice.

where including such references would amount to unfairness to TRG18. No
such unfairness arises as, whilst the matters within this Notice may be
prejudicial to TRG, they are nevertheless relevant, qualified (for example
“potentially fraudulent”), proportionate and accurate.

9. The Authority considers that the nature of the relationship between TRG,
FRPS, SMP and Mr Oxberry is accurately described in this Notice.

10. The information in paragraphs 4.13 and 4.55 is consistent with
information that is already in the public domain and attributed to two
highly reputable sources, namely a statutory notice of another regulator
and Action Fraud (which is run by the City of London Police), and the
Authority considers that it is appropriate for this information to be
included in this Notice.

11. There was publicly available material during the Relevant Period which
ought to have raised concerns with SMP, and Mr Oxberry, in respect of it
partnering with ACER and TRG, had it conducted sufficient due diligence
on ACER/TRG. The Notice draws a link between Mr Oxberry’s failures of
due diligence with respect to matters in the public domain and the
investments which TRG promoted to clients.

12. The Authority considers that any prejudice caused to TRG by paragraphs
4.13 and 4.55 of this Notice is outweighed by the fact that these passages
demonstrate that this business relationship may have been prevented or
curtailed, if appropriate due diligence had been undertaken by Mr Oxberry.

13. With regard to the reference to the Panorama documentary, the Notice
contains a brief, factual description of publicly available material. The
Panorama documentary forms part of the background and circumstances
of the Authority’s case, as regards SMP’s stated reasons for bringing its
relationship with FRPS to an end. The Authority notes that Mr Oxberry
stated in interview with the Authority: “when we all see [sic] … Panorama
about [the Pension Transfer Model] and we all went 'No, we've got to stop
it”. Accordingly, the Authority considers that it is appropriate to refer to
the Panorama documentary in the Notice.

19 Section 393 of the Act envisages that a “third party” could be identified in a statutory notice even if, in the
opinion of the Authority, the third party is prejudiced; and the third party will then receive a copy of the notice.

Matthew Welsh’s Representations

1. A summary of the key representations made by Mr Welsh and of the Authority’s
conclusions in respect of them (in bold type) is set out below.

2. ACER acted as the proposer to SMP of potential third-party introducers (not
individual investors), such as FRPS. Mr Welsh had no part to play in the advice
given by SMP to its clients nor indeed had any direct involvement in relation to the
matters complained of in the Notice. The Notice suggests Mr Welsh, and ACER,
were extensively involved in Mr Oxberry’s dealings with investors and invites
criticism and adverse inferences to be drawn against Mr Welsh in a manner that
suggests that Mr Welsh and ACER were involved in wrongful acts. In addition, the
reference to Mr Welsh being subject to a Determination and Final Notice by The
Pensions Regulator (paragraph 4.55) should be removed, as Mr Welsh merely acted
as a proposer and performed no other function.

3. ACER should not be named in the Notice and instead referred to as “the
Introducer”; this will be consistent in the Notice with the reference to the “Overseas
Adviser Firm”.

4. Mr Welsh should not be referenced in the Notice; all business conducted with Mr
Oxberry by Mr Welsh was on behalf of ACER. The Notice incorrectly implies that he
was conducting personal business with SMP.

5. Prejudice alone is not a basis upon which to decide to remove reference to
the involvement of Mr Welsh and/or to anonymise ACER. The appropriate
basis for removing reference to Mr Welsh’s involvement arises where
including such reference would amount to unfairness to him19. No such
unfairness arises as, whilst the matters within the Notice may be
prejudicial to Mr Welsh, they are nevertheless relevant, qualified,
proportionate and accurate. In addition, no such unfairness arises from
naming ACER; it was dissolved on 29 January 2019.

6. Mr Welsh’s role, as set out in the Notice, is limited to his involvement
(acting on behalf of ACER) in proposing introducers such as FRPS to SMP.
Mr Welsh is not attributed with a role in the advice provided by SMP or in
the operation of the Pension Transfer Model; his role is explained in the
section of the Notice entitled “Design of the Pension Transfer Model”
(paragraphs 4.16 to 4.20).

7. The Authority considers that the information set out in relation to Mr
Welsh’s involvement with the Occupational Pension Scheme (paragraph
4.55) is relevant to the Authority’s case in respect of Mr Oxberry. At the
time of his introduction to SMP in October 2015, Mr Welsh was aware that
he was the subject of a Determination Notice given by The Pensions
Regulator in June 2015; this might have become known to SMP, if it had
undertaken appropriate due diligence by questioning Mr Welsh as to
whether he had been subject to any regulatory investigation/action,
before embarking upon a business relationship with ACER.

8. In addition, the Final Notice, dated 8 February 2016, was published on The
Pensions Regulator’s website and would have been publicly available
during the Relevant Period. The Final Notice sets out the Panel’s findings
that, inter alia, the investments in the Occupational Pension Scheme,
which included TRG, were all high-risk and highly illiquid and described in
the Final Notice in submissions made by the new trustee to the scheme as
“in a class of investments which had been recently been highlighted by
Action Fraud as potentially fraudulent”. Accordingly, there was publicly
available material during the Relevant Period which would have raised
concerns with a reasonable and prudent individual in Mr Oxberry’s position
in respect of SMP partnering with ACER and TRG/FRPS, had SMP conducted
appropriate due diligence on Mr Welsh and TRG. The Notice, at paragraph
4.55, links Mr Oxberry’s failures in due diligence to the matters of concern
expressed by The Pension Regulator and accordingly, the Authority
considers that the inclusion of the information contained in this paragraph
is relevant in order to set out the key facts and matters in Mr Oxberry’s
case.