The Financial Services Authority (FSA) has fined a Derbyshire IFA firm and its partners GBP 49,000.
The FSA identified the failings at Sett Valley Insurance Services (Sett Valley) during a visit focussing on the fair treatment of customers, as part of its assessment programme for small firms.
The subsequent FSA investigation unearthed a number of problems with the firm’s sales and advice processes, including a failure to record sufficient information about customers’ personal and financial circumstances to ensure the suitability of any advice they gave. The firm also failed to communicate with them in a way that was clear, fair and not misleading. The regulator also found the firm’s systems and controls were inadequate and failed to meet the FSA’s requirements.
This case highlights the risks posed by limited control and oversight and the failure of senior management to ensure that their firm can demonstrate the suitability of its advice.
Both of Sett Valley’s partners, Leslie Lugsden and John Hargreaves, were responsible for the problems identified within the firm, and therefore failed in their roles as approved persons performing a significant influence function to ensure that their firm complied with the FSA’s rules.
Lugsden and Hargreaves were each fined GBP 10,500 for breaching the FSA’s Statement of Principles for Approved Persons. Sett Valley was also fined GBP 28,000 for breaching the FSA Principles for Businesses.
Sett Valley is also to appoint an external compliance consultant to conduct a phased past business review of products sold and compensate any customers who may have suffered loss.
Margaret Cole, director of enforcement and financial crime at the FSA, said: “It is unacceptable for a firm operating in this industry not to comply with the FSA’s principles and rules.
“The partners of Sett Valley failed to control their business effectively and exposed their customers to the risk of receiving unsuitable advice.
“The fine levied on Sett Valley reflects the seriousness of the failings found at the firm while the fines imposed on the partners demonstrate the importance we place on senior management discharging their responsibilities effectively. Had they not agreed to settle this enforcement action at an early stage, the fines would have totalled GBP 70,000.”
Comments
I support barry's comments. i had a mortgage adviser who was ripping of clients and me. I got the Police involved and contacted the FSA investigation unit. The police charged him and he was on police bail for 12 months, unfortunately CPS turned the case down as they believe a good barrister could get him off. The FSA contacted me once and since have had no further cotact. Meanwhile i have suffered circa 30k in clawbacks because he's still operating with another company. Where is treating customers fairley, where is my protection, where is the FSA!!!!! We pay a lot of money for what - git rid of the lot is what i say, they have ruined this business and it is one of the main reasons people are not saving for pensions etc. RDR is not the answer- more advisers to talk to the public is.
The FSA are so inconsistent with what they do, for example how come that when the FSA are alerted about a network that is not paying there brokers for months at a time and are not paying the rent on the offices along with rates and other bills they tell us that it’s not their problem and that’s a commercial issue and the very people that Pay their incomes are the Brokers/IFA’s who need as much, if not more protection by the regulator are not considered important enough to be given that protection, and then to read Ms Cole statement as taken from the article,
“Margaret Cole, director of enforcement and financial crime at the FSA, said: “It is unacceptable for a firm operating in this industry not to comply with the FSA’s principles and rules”
Well it just makes me Sick, when are these people going to support the brokers/IFA’s who have had to go Bankrupt or seek help with IVA;s and loose everything, homes included, because networks have kept the brokers earnings, run their businesses to suit themselves, and the FSA do ABSOLUTLY NOTHING
I am all for finding villains and criminals and protecting the customer but what sounds more like poor admin procedures and not criminal activities and then hit them with such massive fines, just look like a publicity stunt so the FSA can show “look at how tough we are” If the FSA want to protect the public, think again about what you are looking to do with your Ill thought out RDR and MMR planes as I believe you are leading this industry in to some very serious trouble, Just ask the men and women who work in it with thousands of years combined experience instead of listening solely to the theorists that have never had a face-to-face with a client in their lives!!!.