IFA fined £35k for errors on Ucis promotion and advice
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The FSA has fined an IFA firm £35,000 for promoting unregulated collective investment schemes to clients without properly assessing suitability.
The regulator visited Specialist Solutions in February 2010 as part of a thematic review into the promotion of Ucis and identified problems concerning some of the firm’s recommendations.
Between January 2008 and December 2009, Specialist Solutions recommended Ucis to 101 customers who invested a total of £11,244,923 in at least one of three Ucis funds.
Around 98 per cent of the firm’s Ucis business was invested through a product wrapper such as a Sipp or bond. The investments in Ucis generated gross commission for Specialist Solutions of £321,827.
Last October, the FSA told Specialist Solutions to appoint a skilled person to rev- iew the files of all customers advised to invest in Ucis. The skilled persons report found the firm promoted Ucis without first establishing if the clients were eligible to receive such promotions.
The report also found that in a detailed review of 20 files, suitable advice was given in just three files while nine files demonstrated unsuitable advice. Of the remaining eight files, there was insufficient documentation to judge whether advice was suitable or not.
In its final notice against Specialist Solutions, the FSA gives an example of the unsuitable advice the firm was giving. One client, aged 60, was advised to invest 35 per cent of his port-folio in a Ucis by transferring funds from his existing pension plan, incurring a 4 per cent penalty charge, despite the client’s risk attitude being recorded as low to medium.
The regulator says Specialist Solutions must contact all Ucis customers that may have got unsuitable advice and compensate any who have suffered detriment.
Compliance consultant Adam Samuel says: “This is the fifth final notice relating to Ucis since September 2010. It is obvious that there are more investigations in train. “The FSA has been dishing out warnings on Ucis and some firms are just not taking these warnings seriously.”
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