FSA has fined Accendo Markets Limited £56,000 and its compliance officer, Gregory White, £10,000 for breaches of its Principles for Business and Statement of Principles for Approved Persons respectively in respect of activities relating to contracts for differences (CFDs). Over a period of around two and a half years, the firm advised customers and helped arrange deals for them in CFDs with other authorised firms (who then dealt as principal with the customers). Nearly all the firm's business related to guiding customers on structuring and executing their CFDs with the principals. During a thematic review, FSA raised concerns over the firm's:
- account opening process, which allowed customers to open and fund accounts before customer due diligence was carried out. The account opening process did not determine the customers' trading strategies, or properly assess net worth;
- record keeping in respect of suitability assessments;
- practice of allowing customers to deposit moneys beyond a suitable level;
- compliance monitoring;
- procedures for ensuring adequate training and qualifications for its advisers; and
- ability to ensure brokers always distinguished properly between execution-only and advisory transactions.
FSA found the firm had breached Principles 3 and 9 and that Mr White, who held the controlled functions of director, compliance officer, money laundering reporting officer and adviser had breached Approved Persons Principles 6 and 7. Despite considering the failings serious, FSA found both the firm and Mr White had taken significant steps to mitigate the failings. Following a skilled person's report, and the firm's review of its business model in anticipation of the Retail Distribution Review the firm varied its permission to an execution-only business model.(Source: FSA Fines Compliance Officer over CFD Failings)
