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ARTICLE · 11 JUNE 2018

Principals' Liability When Appointed Representatives Go Rogue

Mishcon de Reya LLP
Mishcon de Reya LLP
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Mishcon de Reya LLP

Mishcon de Reya LLP

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There have been a number of cases in recent years regarding the relationship between Principals and ARs and it is also a recurring area of interest for the FCA.

United KingdomWealth Management
Mishcon De Reya
Mishcon De Reya

In the recent case of R (on the application of TenetConnect Services Limited) v Financial Ombudsman [2018] EWHC 459 (Admin), the challenge of a jurisdictional decision made by the Ombudsman, there was some interesting commentary regarding the liability of Principals when Appointed Representatives (ARs) act outside of their arrangements with a Principal.

Mr and Mrs Thorpe engaged Mr Dhanda, a financial advisor. Dhanda was an AR of TenetConnect Services Limited. Dhanda recommended that the Thorpes sell certain specified investments (a Friends Life Policy, bonds and ISAs) in order to fund an alternative unregulated investment (a property in Goa) and some loans. The funds that they released were never invested by Dhanda, but apparently used by him to fund a gambling habit. Dhanda was later imprisoned for defrauding 37 people (including the Thorpes) in connection with what was described as a £2.9m Ponzi-type fraud. The Thorpes (and others) complained to Tenet about

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