FCA publishes decision to fine and ban for lack of integrity: FCA has published its decision to fine Paul Reynolds £290,344 and ban him from the industry because it believes he lacks integrity. It found that, over a five-year period, he recklessly recommended high-risk investment products to eight retail clients, when he knew that he could not justify their suitability. FCA also considered he was knowingly or deliberately involved in:
- falsifying signatures to make it appear two clients had signed sophisticated investor certificates;
- investing for two clients without their knowledge or authorisation;
- giving clients inflated valuations to mislead and hide poor performance;
- submitting loan facility and investment applications, on behalf of a number of his clients, which contained inflated incomes and other false and misleading information; and
- trying to mislead FCA by retrospectively creating various documents and claiming they were contemporaneous.
FCA said most of the clients were on low incomes and had little or no investment experience. Mr Reynolds recommended complex and high-risk products which were unlikely to be suitable. It also found that the clients sometimes did not know they had invested in unregulated investments or of the associated risks. The decision is provisional because Mr Reynolds is appealing to the Tribunal. The Tribunal refused an application to block publication of FCA's notice. (Source: FCA Publishes Decision to Fine and Ban for Lack of Integrity)
FCA consults on retail sale of regulatory capital instruments: FCA is consulting on proposals to:
- restrict the sale of a mutual society's core capital instruments, so that investors would not be allowed to invest more than 5% of their net assets. The rules would apply only to primary issues but this may be reviewed if FCA detects attempts of arbitrage; and
- make permanent the restriction on the retail distribution of contingent convertible securities (CoCo), which came into force on 1 October and expires on 1 October 2015.
The consultation is open until 29 January 2015. (Source: Restrictions on the Retail Distribution of Regulatory Capital Instruments)
FCA fines YBS for mishandling of mortgage arrears: FCA has fined Yorkshire Building Society (YBS) £4,135,600 (after applying a 30% reduction for early settlement) in relation to its handling of mortgage customers in payment difficulties or arrears. FCA requires a mortgage lender to make reasonable efforts to reach agreements with customers in difficulties which are tailored to their circumstances and allow them a reasonable time for repayment. It found that, over a 10-month period:
- call handlers at YBS failed to probe into the particular circumstances of individual customers and asked for ad hoc payments, instead of determining payment solutions (including repossession);
- YBS failed to provide training to call handling staff;
- quality assurance monitoring and management information were inadequate; and
- call handlers failed to acknowledge customer complaints.
The failings were serious but mitigated by the fact that YBS has taken proactive steps to provide redress to the affected customers. (Source: Final Notice YBS)
FCA feeds back on Project Innovate: FCA has fed back on stakeholders' responses to its consultation on Project Innovate, its initiative to support industry innovation that can benefit consumers in financial services markets. The key points of FCA's response are that it will:
- address concerns over legal certainty by providing individual guidance and informal steers to those in need of most support, and carrying out public clarification exercises where appropriate;
- engage with Treasury on the potential regulation of Bitcoin;
- consider concerns about smaller businesses having difficulties in opening business bank accounts;
- develop the innovation section of its website;
- offer services through its Innovation Hub that will cover both the authorisation process and continued support for up to a year after authorisation; and
- use the criterion of consumer benefit when selecting which businesses or innovations it supports. FCA has also produced the full list of criteria it will use when deciding whether a business or innovation qualifies for support.