UT-2023-000032 - [2024] UKUT 00265 (TCC)

Amanda Ford was employed as Managing Director (“MD”) for Tenet Financial Services (“TFS”) and Tenet & You. She joined Tenet in 2004 and has held various roles across the business.

Ms Ford explained that Mr. Ashraf was a self-employed registered individual for a Tenet appointed representative (“AR”), TFS, authorised to carry out a range of investment business including mortgage advice. Mr. Ashraf was dual authorised with another Tenet firm, Uniec Prestige, to conduct their defined benefit (“DB”) pension business as well as his own client DB business within TFS.

All DB business was pre-approved by the Advice Standards Team (“AST”) (Tenet’s file checking team) to identify and address any issues that could lead to poor quality advice before advice was given to clients, with a view to preventing client detriment. In February 2021, Ms Ford was made aware that Jon Forbes (who was responsible for oversight of Mr. Ashraf when working for TFS) had concerns regarding the standard of pension transfer cases submitted by Mr. Ashraf. As a result of these concerns, on 23 March 2021, the Tenet authorisations team was instructed to remove Mr. Ashraf’s DB licence. Ms Ford said that she was not part of the decision-making around Mr. Ashraf losing his DB licence. She knew that Tenet had been reviewing advisers with DB licences. Some people had their licences taken away and others had given their licences up as the compliance burden was becoming onerous. She was aware that Tenet had been in communication with the Authority about issues arising from people transferring out of the British Steel Pension Scheme, but she was not privy to the detail of that. In response to a question from Mr. Fatchett, Ms Ford said that, where advisers had their DB licences taken away, the decision was based on the quality of their work. She was not aware of how many advisers had their DB licences removed.

Mr. Ashraf was placed on enhanced monitoring for a period of time as a result of losing his DB licence. Ms Ford explained that anyone who lost their DB licence would be put on enhanced monitoring. A key aspect of enhanced monitoring was extra file checks on all types of advice, a monthly phone call and support plan. It was from these file checks that issues relating to the quality of due diligence being conducted by Mr. Ashraf were identified and referred to Michael Hancock

On 16 July 2021 concerns were raised after the AST raised a suspicious activity report for one case as a result of Mr. Ashraf not conducting sufficient financial crime due diligence. A further report was made of a similar nature. These reports highlighted concerns that Mr. Ashraf was not conducting sufficient due diligence on his clients.

During further engagement with Mr Forbes, concerns were raised around Mr. Ashraf’s conduct in several areas including: due diligence of mortgage clients, potentially dealing with clients overseas, use of unapproved introducers, pension transfers, and inconsistent charging.

On 1 September 2021 Mr. Forbes and Ms Ford held what Ms Ford described as an informal interview with Mr. Ashraf on a Microsoft Teams video call. Ms Ford commented that, during the interview, Mr. Ashraf offered limited and short responses to all questions and appeared not to understand why they were asking the questions they were asking or the implications of their questions. This resulted in concerns being escalated to Mr. Hancock to address as part of an investigation he was already conducting into Mr. Ashraf’s financial crime due diligence processes.

On 11 October 2021, Mr Hancock issued his investigation findings and recommended terminating Mr. Ashraf. On 18 October 2021 Mr Hancock was instructed to action the termination of Mr. Ashraf’s authorisation and contract.

All clients were written to and informed of Mr. Ashraf’s departure from TFS and given a point of contact for the future. All clients paying an ongoing servicing fee were allocated a new adviser to pick up servicing commitments. During the re-engagement by the new advisers, further concerns were raised with Tenet in relation to Mr. Ashraf’s client engagements. Some clients said that they had not had annual reviews with Mr. Ashraf, which are standard for all industry advisers. Tenet investigated any claims raised in relation to missing annual reviews. Where Tenet found no evidence of these on the file (for example a Suitability Report/Fact Find/Refreshed Attitude to Risk) and where the client had reported no review, the client ongoing servicing fee was refunded. In addition, four complaints were raised post termination, and these were settled by compensation. The full scope of these matters was not explored, but there was no challenge to Ms Ford’s summary account of them.

Ms Ford described the meeting as informal, as neither she nor Mr. Forbes were decision makers as far as Mr. Ashraf was concerned. She wanted to give him an opportunity to reply before any investigation. She knew that monitoring or restrictions on his activities could be in point, but did not know before this meeting that termination was a possibility. Mr. Ashraf had not been told in advance that Tenet had concerns about him. She could see how this could be seen as ambushing Mr. Ashraf, but (as far as she was concerned) this was not the case at all. She just wanted to give him an opportunity to reply to the concerns raised. After this meeting she stepped back from dealing with Mr. Ashraf. Notes of the meeting were not shared with Mr. Ashraf and she accepted that she should have done this. She said that the opportunity to fill in gaps and provide further detail, would come in Mr. Hancock’s investigation. She has seen Mr. Ashraf’s Appeal Letter and agreed that Mr. Ashraf had given answers to the concerns in the cases Mr. Hancock reviewed that should have been considered. She said that she had not intervened as she would not have been able to affect the outcome. She agreed that she had not pointed out that Mr. Ashraf had provided more information than in the 16 September meeting.

Mr. Fatchett took Ms Ford to the list of training and competence meetings Mr. Ashraf attached to his Appeal Letter. This showed that he had received no training or competency support or reviews since January 2020. Ms Ford said that Mr. Ashraf’s previous manager had left. She was surprised that Mr. Forbes had not been more involved. As well as oversight, Mr. Ashraf would be able to access group policies from the intranet and from the administration team. There was also a requirement for continuing personal development which included mandatory testing on understanding of financial crime issues.

Mr. Fatchett took Ms Ford to an Investigation and Financial Crime Review Summary document dated 5 October 2021. She believes this is a summary of the 16 September meeting, but she did not prepare or review it; this would have been done by Mr. Forbes. Mr. Fatchett ran through the issues noted in this document. One concern was around Mr. Ashraf using introducers who had not been approved by Tenet. Ms Ford said this would not have been a major issue as long as he stopped. The second issue was a mortgage charging issue. Here the issue was that Mr. Ashraf did not always charge people fees. This was not just a commercial issue, but engaged the regulatory duty to treat people fairly. Again, this would not be a major issue as long as Mr. Ashraf charged clients properly in the future.

Mr. Forbes had raised other issues in the form. Tenet had a policy of not allowing advice to be given to people outside the UK and there was a concern that Mr. Ashraf had done this. Ms Ford said that Mr. Ashraf would have been given an opportunity to satisfy Tenet that he believed the clients to be in the UK during the formal investigation. Mr. Fatchett asked whether it would be a problem if Mr. Ashraf could show that the client lived in the UK. Ms Ford said that, if this were the case, it would be a breach of Tenet policy which could be addressed by training.

There was an issue around pension transfer advice, in particular the volume of transfers. There were cases where clients were moved to one provider when others were being moved out of the same provider allegedly on service grounds. Tenet had a strict policy around pension switching as there would be a detriment to clients if they moved and incurred a fee when there was no need to move.

The form then summarised the financial crime interview on 30 September. Ms Ford confirmed that she had not been involved with that. She agreed that the issues covered in her 16 September meeting had all been minor ones, although she said that the cumulative effect of a number of minor issues could be significant. Ms Ford confirmed that the decision to terminate Mr. Ashraf had been based on Mr. Hancock’s formal investigation, not her meeting.

Mr. Fatchett put it to Ms Ford that, if Mr. Ashraf’s training record was correct, Tenet had not delivered any oversight or training. Ms Ford declined to answer that question. She said that Mr. Forbes must have been exercising some oversight or these issues would not have been picked up.

Ms Ford agreed that she was surprised that Mr. Hancock had used her notes to write this report and agreed that, if she had known he was going to do this, she would have warned Mr. Ashraf to reply carefully. She thought that Mr. Hancock would have discussed these issues with Mr. Ashraf. Nevertheless, she agreed that Mr. Hancock’s summary of her 16 September meeting was correct.