An IFA network (owned by Royal Liver Assurance Limited) has been censured for breaches of Principle 3 and Principle 9 arising from its failure to implement sufficient controls to ensure that files properly evidenced the suitability of sales, that sales were suitable or that compliance checks were adequate. The failures included advisers giving advice when not authorised to do so, inadequate suitability letters and failing to take sufficient steps when issues arose (including in relation to the possibility of advisers being influenced by commissions and the need to review past SIPP recommendations and pension switches). The firm had also failed adequately to select advisers for compliance reviews, failed to ensure remedial work was carried out or commission clawed back as appropriate and failed to allocate sufficient internal resource to compliance checks. Had it not been for the firm’s financial position and the wind down of its business, a fine of £2.4m would have been imposed. The firm had also agreed to undertake a customer contact programme relating to certain high-risk sales with a view to paying redress to customers who were not treated fairly. The redress is estimated to be around £5m to £7.8m.
View Park Row Associates Limited, 23 February 2010
The firm’s former chief executive has been fined £49,000 and had his approval withdrawn for breaches of Statement of Principle 7. He has also undertaken not to perform a significant function at any firm for five years.
View Peter Sprung, 23 February 2010
A high net worth financial advice firm has settled with the FSA for a fine of £700k for breaches of Principle 3 and Principle 9 and COBS Rules. Without settlement, the fine would have been £1 million. The firm has agreed to conduct a past business review (which will include sales of structured products backed by Lehman Brothers, other structured products and pension switching) to be reviewed by the FSA and an independent third party and will then implement a customer redress exercise if necessary. In addition, a skilled person will be appointed to review current sales and compliance processes. The failures included inadequate information gathering and ineffective compliance monitoring. In particular, in relation to structured products, the firm failed to full assess product concentration risk and failed to identify and remedy the use of non-compliant direct offer financial promotions
View RSM Tenon Financial Services Limited, 24 February 2010