Tribunal upholds Harlequin adviser ban but slashes fine

The UK’s financial watchdog’s decision to ban former Tailormade chief executive Alistair Burns for a “fundamental lack of competence” relating to overseas investment projects – including the doomed Harlequin scheme – has been upheld by the Upper Tribunal.

The court also upheld the Financial Conduct Authority’s fine but reduced it to £60,000 down from £233,600.

For three years between January 2010 and January 2013, Tailormade gave advice to 1,661 customers who were considering transferring or switching their existing pension funds via self-invested personal pensions (SIPPs) into unregulated investments, such as green oil, biofuels, farmland and overseas property, the FCA said.

The Tribunal ruled that the overseas investments, such as the controversial Harlequin Buccament Bay scheme, pictured above, that Tailormade advised on were “inherently risky” and that the customers were given “unsuitable” advice.

‘Wholly unsuitable’
The FCA said that customers were given “wholly unsuitable advice” to transfer pension benefits into a SIPP which was to be invested in either a single, or a very small number, of risky overseas properties”.

The regulator says Burns benefited significantly though his dual position as director and shareholder of an unregulated introducer also operating under the Tailormade banner.

Customers invested a total of £112m into the alternative investments under recommendation from Tailormade.

“Mr Burns failed to ensure that Tailormade managed its conflicts of interest. Our action sends a strong message that failing to manage conflicts of interest fairly and disclose them clearly is completely unacceptable,” FCA executive director of enforcement and market oversight, Mark Steward, said.

Compensation totalling more than £55m has already been paid out to customers by the Financial Services Compensation Scheme.

Pedro Gonçalves
Pedro Gonçalves is Financial Correspondent at International Investment.

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