FSA fines stockbroker for poor risk warnings and advice

31 October 2007 10:35 am

The firms was also fined for being unclear, unfair and misleading when advising on the shares.

The FSA reviewed 17 transactions carried out by Wills & Co between April and December 2006 and found that in all of them advice on penny shares had been given in a rushed manner without clear and/or prominent warnings about the higher risks involved.

The FSA says in addition Wills and Co did not make it clear, at the point of sale, that the penny shares were from its account and included a mark up, which was to the company’s benefit. It also did not disclose information about its charges in a way that was clear to customers or have in place adequate compliance arrangements to monitor its business.

The FSA says this was considered particularly serious as its business involved the sale of higher risk shares.

FSA director of enforcement Margaret Cole says firms have an obligation to tell their customers about the risks they face when buying any financial product.

“Wills & Co failed to do this so its customers were unable to make proper and informed investment decisions, which is an essential element in treating customers fairly.

“This fine should serve as a warning to other small firms who might be using these practices that they are not under our radar and the FSA will do all it can to ensure consumers are given suitable information and properly protected.”

The FSA says Wills & Co agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount of the fine under the executive settlement procedures.

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