FCA fines ex-CEO over risky pension schemes
The Financial Conduct Authority has banned Demetrios Hadjigeorgiou from working in financial services and fined him £56,400 for mismanaging SVS Securities, a firm that handled investments for retail pension customers. The regulatory action shows the FCA’s commitment to holding senior executives accountable when their decisions compromise the financial security of individuals relying on pension savings for retirement. SVS Securities operated as a discretionary fund manager, meaning it had direct control over investment decisions on behalf of clients, many of whom were ordinary retail customers with limited financial expertise.
Hadjigeorgiou served as chief executive officer of SVS from May 2018 to August 2019. During his tenure, the firm placed customers’ pension savings into high-risk products while receiving payments from the companies issuing them, the regulator said. These arrangements created a clear conflict of interest, as SVS stood to benefit financially from promoting certain investments, regardless of whether they were suitable for clients. The FCA’s investigation revealed that Hadjigeorgiou did not implement adequate safeguards to prevent such conflicts from influencing investment decisions, leaving customers exposed to unnecessary risks.
Customers lost savings after undisclosed markdowns
The FCA found that Hadjigeorgiou failed to challenge a 10% reduction in customers’ bond investments when they were sold, which generated £359,800 for SVS. The markdown, applied without transparency, meant that clients received less than the full value of their assets at the point of sale. This practice not only eroded trust in the firm but also had tangible financial consequences for pension holders, some of whom saw their retirement savings diminish as a direct result. The regulator’s findings suggest that Hadjigeorgiou either overlooked or deliberately ignored the implications of this markdown, prioritizing the firm’s revenue over customer welfare.
In its final notice, the regulator concluded that Hadjigeorgiou “failed to exercise due skill, care and diligence” in running the business. The FCA’s assessment highlighted systemic failures in governance, including a lack of independent oversight and insufficient checks to ensure compliance with regulatory standards. The notice also determined he “is not a fit and proper person” and “poses a risk to consumers and to the integrity of the financial system.” This judgment reflects the FCA’s broader concern about individuals in senior roles who neglect their responsibilities, particularly when managing products as critical as pensions, where the stakes for customers are exceptionally high.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Building up a pension for retirement is one of the most important investments you can make. Mr Hadjigeorgiou put people’s savings at risk and his actions have left people worse off in retirement.” Her statement reinforces the regulator’s stance that pension investments require rigorous protection, given their long-term nature and the limited opportunities for individuals to recover from financial losses later in life. Chambers’ remarks also signal the FCA’s intent to pursue enforcement action against executives who fail to uphold their duty of care, even in complex or high-pressure environments.
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She added that the regulator would act against senior leaders who fail to prioritize customer interests. This commitment aligns with the FCA’s broader strategy to improve standards across the financial services industry, particularly in sectors where conflicts of interest and inadequate disclosure have historically led to customer harm. The case against Hadjigeorgiou serves as a cautionary example for other executives, demonstrating that regulatory scrutiny will extend beyond firms to the individuals responsible for their operations.
Fine reduced after partial reclassification of misconduct
The FCA initially proposed a fine of £84,600 but reduced it to £56,400 after reclassifying part of the misconduct related to the 10% markdown on fixed-income investments. The reduction followed a review of the specific circumstances surrounding the markdown, including the extent of Hadjigeorgiou’s direct involvement and the broader context of SVS’s decision-making processes. While the fine was lowered, the FCA maintained that the underlying misconduct warranted significant penalties, reflecting the seriousness of the failures and their impact on customers. Hadjigeorgiou settled the case and withdrew his referral to the Upper Tribunal, accepting the ban and reduced penalty, which suggests a recognition of the regulator’s findings despite the adjustment.
SVS Securities entered special administration in August 2019 and was dissolved four years later. The firm’s collapse followed a period of financial instability, during which customer assets were placed in increasingly precarious positions. The FCA’s action against Hadjigeorgiou follows its broader scrutiny of firms managing self-invested personal pensions, where conflicts of interest and poor disclosure have led to customer losses in the past. The regulator has previously identified weaknesses in the SIPP market, including inadequate risk assessments and insufficient transparency around fees and investment performance. These issues have prompted the FCA to introduce stricter rules for firms operating in this space, aiming to prevent similar incidents in the future.
While the case centers on a single executive’s decisions, it reflects wider concerns about how some firms handle retirement savings—particularly when high-risk investments are involved without clear communication to customers. The FCA has repeatedly warned that pension holders often lack the expertise to assess such risks, making proper oversight from firms and regulators critical. Many retail customers rely on professional advice or discretionary management to handle complex financial products, assuming that their best interests are being prioritized. When firms fail to meet these expectations, the consequences can be severe, particularly for individuals nearing retirement who may have limited time to rebuild their savings.
The regulator’s final notice was issued after Hadjigeorgiou received an initial decision notice in April 2024. The process leading to the final notice involved a thorough review of evidence, including internal documents, communications, and financial records from SVS. The FCA’s enforcement team assessed the extent of Hadjigeorgiou’s responsibility for the firm’s failures, considering factors such as his role in decision-making, his awareness of the risks, and his response to potential red flags. No further appeals are expected, bringing the case to a close and reinforcing the regulator’s determination to hold individuals accountable for lapses in governance and compliance.
