FSA fines stockbroker £250,000 for high pressure sales tactics
The FSA has fined Square Mile Securities Limited £250,000 for persistently using high pressure sales tactics and misleading information to sell customers shares they did not want or could not afford.
The FSA says it reviewed 55 transactions carried out by Square Mile between March and May 2006, some involving older persons and inexperienced investors.
The regulator’s review found that Square Mile had set up a high pressure sales business that disadvantaged customers and did not have appropriate controls. It also showed that Square Mile knew its advisers frequently used unacceptable sales tactics and sometimes failed to get a customer's consent before selling them high risk shares.
In addition, the FSA says Square Mile made false statements, provided inaccurate and misleading information and failed to disclose important details and significant risks about the shares to its customers. The firm also made recommendations without first ensuring these were suitable for the customer.
Square Mile's failings warranted a fine of £1.5m but this was reduced because of its financial circumstances and its agreement to settle at an early stage of the investigation, according to the regulator.
Square Mile has agreed to send its customers a letter advising them of the FSA's findings which will include information on how they can make a complaint.
FSA director of enforcement Margaret Cole says: "High pressured sales practices are wholly unacceptable. Firms that use such sales tactics undermine the regulatory requirement to treat customers fairly. A firm's customers are entitled to rely on it to provide them with advice and information that is clear, accurate and not misleading.
"The FSA will not tolerate any regulated firm coercing customers into buying financial products or services they do not want or can't afford. We are currently reviewing how stockbroking firms conduct their business and will not hesitate to take action against any that falls short of the standards we expect."