FSA has found an independent financial adviser (IFA) breached Principles 6 and 9. The IFA breached Principle 6, a firm’s obligation to pay due regard to the interests of its customers and treat them fairly, because he:

  • incorrectly categorised advised sales as "execution-only" and because of this gave clients advice without complying with FSA’s requirements on advised transactions;
  • sought to exclude or restrict his duties to his customers; and
  • did not have in place an adequate and documented complaints handling process.  

He breached Principle 9, a firm’s obligation to take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment, because he:

  • failed to assess or record adequately his customers’ personal and financial circumstances, objectives or attitudes to investment risk. He claimed that the information was in his head rather than documented and that he relied on customers to confirm they could afford the products he recommended;
  • failed to ensure that products were researched adequately and in line with the "whole of market" advice service that he was providing; and
  • failed to record why his recommendations were suitable.

FSA also found that the IFA failed to attend appropriate training and that he recommended and arranged regulated mortgages when he was not qualified to do so. Overall, FSA concluded that the IFA exposed his customers to the risk of unsuitable advice, did not treat customers fairly in relation to redress and was not a fit and proper person. FSA has imposed a penalty of £10,500 on the IFA, withdrawn his approval to perform controlled function CF10, cancelled his Part IV Permission and made a Prohibition Order against him. (Source: FSA Fines and Bans IFA)