Just be sure that the new lists you give him aren't excessively powerful... The paladins lists are relatively weak (unless battling an 'enemy') which offsets that they are really good fighters for semi-spell users. But you can also tweak things to balance as you go.
Another option is to use talent points to give him a list. If your using talent points this method actually makes the most sense to me. One of his background character elements is that he's Fey touched. If your not planning on doing traditional talents, you could give him his extra list, but also give him flaws (to reach a total of 0). Perhaps being fey touched makes him hunted, or gives him a distinctive feature (silver streak though is hair, or unusual eyes).
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On a side note, the essence companion has a list for summoning Fey's, and even bonding with them... this could be an interesting list for your Pallie. For that matter, if he is a Fey Touched Paladin.. is he serving a god?... might he be an Essence user?